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This article describes capital spending patterns for general purpose local governments in 36 large U.S. metropolitan areas for the period from 1987 to 1991. Capital spending by central cities dominates metropolitan area expenditures in each year. The results suggest that at least for local capital spending, central city residents provide the bulk of funds devoted to metropolitan area infrastructure provision. The primary reasons for this dominance are that city governments spend more than suburbs overall, and their spending is more heavily weighted toward capital in the most capital-intensive functions. City spending is not more concentrated in heavily capital-intensive functions. Highway and sewer aid from other levels of government favors cities but does not fully compensate them for the greater capital spending they undertake.

This article analyzes municipal governments, capital spending, and revenue‐raising decisions between 1993 and 2000, an era of unprecedented economic growth. It finds that, as anticipated, greater‐than‐expected revenues allowed many cities to advance projects from their capital improvement plans to their capital budgets. Moreover, the article concludes that growth in cities' own‐source‐revenue‐generating capacity and transfers from carryover or ending balances from earlier years, rather than debt issuances and intergovernmental aid, seem to be the most important fuel for the remarkable growth rate in capital spending.

Zsfassung in niederländ. Sprache

Abstract In a great majority of countries throughout the world productive government services have declined as percentage of GDP since the 1970s. In the macroeconomic literature this is often associated with the general productivity growth decline, suggesting an important role for infrastructure investment in economic growth. However, this also raises the question as of why public capital spending declined in so many countries. Surprisingly, hardly any research on this exists. This paper is one of the first attempts to fill this gap by testing various hypotheses that may explain the development of government capital spending using panel data for 123 non-OECD countries for the period 1970{1998. Politico-institutional variables, like ideology, political cohesion, political stability and political business cycles do not seem to be important when explaining government capital formation in less-developed economies. On the other hand, variables like public decits, private investment and foreign aid are significantly related to public capital spending.

The Government of Algeria has pursed a relatively expansionary fiscal policy in recent years, thanks to rising oil prices and revenues. The paper explores the potential effects of such a stance on real exchange rate and uncovers a relatively small appreciating effect of increased government capital expenditure. This is explained by the fact that a significant share of capital spending falls into tradable imported goods. However, the envisaged increase in capital spending, if well designed and implemented, might in the long-run translate into rising operations and maintenance expenditure-mostly

What is the impact of capital spending for buildings, equipment, and other facilities on future operating expenditures of municipal governments? Because capital spending decisions are made independent of operating decisions in many larger municipalities, managers make long‐term capital commitments without fully understanding the repercussions for operations. This implies the need for research that examines more closely the linkages between these budget cycles. This article develops a theory of the relationship between capital and operating expenditures, then uses data from the fortyeight largest U.S. cities to estimate both the magnitude of capital's impact and the time it takes for operating budgets to adjust. The study finds that five of six commonly provided municipal services were affected to varying degrees by past years' capital expenditures. Especially notable is the finding that the operating budgets of labor‐intensive services, such as police and fire protection, are most sensitive to capital spending. For public managers, the findings point to the need for closer coordination between the capital and operating budget cycles, especially in those cases where capital outlays have clear, unambiguous positive implications for future operations.

This article examines whether local earmarking practice results in an increase in the level & share of a designated category of spending. Empirical findings suggest that the use of a special purpose local option sales tax (SPLOST) earmarked for local capital projects in GA increased both the level (per capita spending) & share (designated category of spending as a percentage of total spending) of capital spending in counties using the tax. The author finds that, as in most earmarking studies, an extra dollar of SPLOST resulted in less than a full dollar of capital spending. However, the magnitude of the effect of local earmarking seems to be larger than at the state level, & total spending also increases significantly with local earmarking, despite the fact that earmarked revenue can be diverted to substitute for other revenue sources. A form of taxation such as SPLOST may be especially viable in states in which taxpayers are unwilling to accept increased property taxes or general obligation bond issues for local capital projects. 2 Tables, 27 References. Adapted from the source document.