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The Demand for Municipal Infrastructure Projects

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  • Laurie J. Bates
  • Rexford E. Santerre

Abstract

Many studies have investigated the determinants of current local public expenditures whereas only a few have studied the factors explaining the capital decision-making process at the local government level. This study uses a panel data set of Connecticut town and cities over the 2000 to 2010 period to estimate the local public demand for various types of capital infrastructure projects. The multiple regression analysis reveals a number of insights regarding the capital-investment decision of local communities. First, unlike the demand for current expenditures, the demand for capital-investment projects is elastic with respect to tax price. Second, unlike the demand for current expenditures, the demand for capital projects is not directly related to changes in income. Finally, intergovernmental grants are shown to be an important determinant of capital investment spending although the specific aid doesn’t always seem to stick where it initially hits.

Suggested Citation

  • Laurie J. Bates & Rexford E. Santerre, 2015. "The Demand for Municipal Infrastructure Projects," Public Finance Review, , vol. 43(5), pages 586-605, September.
    • Handle: RePEc:sae:pubfin:v:43:y:2015:i:5:p:586-605
    DOI: 10.1177/1091142114527782
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    References listed on IDEAS

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    Cited by:

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    2. Mbanda, Vandudzai & Bonga-Bonga, Lumengo, 2019. "Municipal infrastructure spending capacity in South Africa: a panel smooth transition regression (PSTR) approach," MPRA Paper 91499, University Library of Munich, Germany.

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