Municipal Construction Spending: an Empirical Examination

41 Pages Posted: 17 Oct 2007 Last revised: 4 Mar 2021

See all articles by Douglas Holtz-Eakin

Douglas Holtz-Eakin

Syracuse University; National Bureau of Economic Research (NBER)

Harvey S. Rosen

Princeton University - Department of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute)

Date Written: May 1989

Abstract

Despite widespread concern and discussion, no consensus exists concerning the causes of the "infrastructure crisis." We investigate several models of the determination of local public capital expenditures. Using Euler equation methods, we find that the hypothesis that construction spending is determined by unconstrained, forward looking municipal planning cannot be rejected. consistent with this result, we find that the stochastic structure of own revenue and grant flows is an important feature of the determination of construction spending. Only unanticipated changes in a community's resources alter its demand for structures. An unanticipated increase in resources of one dollar increases current construction spending by about 5.5 cents.

Suggested Citation

Holtz-Eakin, Douglas and Rosen, Harvey S., Municipal Construction Spending: an Empirical Examination (May 1989). NBER Working Paper No. w2989, Available at SSRN: https://ssrn.com/abstract=463445

Douglas Holtz-Eakin (Contact Author)

Syracuse University ( email )

900 S. Crouse Avenue
Syracuse, NY 13244-2130
United States
315-443-3612 (Phone)
315-443-3717 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Harvey S. Rosen

Princeton University - Department of Economics ( email )

001 Fisher Hall
Princeton, NJ 08544
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
30
Abstract Views
481
PlumX Metrics