This introduction to the Economic Policy Review special issue "The Future of New York City: Charting an Equitable Recovery for All" offers highlights of all papers presented at the March 2022 conference of the same name, as well as the event's opening remarks and keynote discussion, and it previews the three papers that are included in full in the issue.
ABSTRACT The effects of state public capital investment on economic growth is an important question that has been the focus of a recent substantial research effort. But the majority of this research has ignored these investments'influence on the intra‐state pattern of economic activity. Yet if external agglomeration economies are important determinants of growth, then investments may indirectly affect growth by fostering or discouraging agglomeration. This paper discusses the effect of state infrastructure investments on the distribution of employment within states and the implications of these spatial effects for aggregate state employment growth. Preliminary empirical results suggest that state infrastructure investments tend to redistribute growth from areas of dense employment to other parts of the state. This redistribution may diminish agglomeration benefits offered by cities, which has the potential to reduce state growth. The paper concludes with a discussion of implications of the work for research and policy.
Includes relationships between cities and suburbs, role of local fiscal policies in regional well-being, and a model for measuring benefit spillovers from policies; 1987-91; US.
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.
In: Political science quarterly: a nonpartisan journal devoted to the study and analysis of government, politics and international affairs ; PSQ, Band 111, Heft 1, S. 187-188
Cities are the location of the great majority of economic activity in the United States and produce a disproportionate share of output. It is thus critical for the economy's long-term growth that cities operate efficiently. In this article, the authors review the basic determinants of output growth, with a focus on productivity growth in cities. The authors then explore the effects of a particular distortion in politically fragmented metropolitan areas. After documenting the interdependence of the suburbs and central city of a metropolitan area, the authors develop a model that embodies many of the empirically verified aspects, including agglomeration economies and public goods. After calibrating the model to outcomes for Philadelphia, the authors use it to simulate various policy changes. The authors conclude that, under the model, some kinds of fiscal redistributions can provide benefits in both cities and suburbs.
Recent experience with disasters and terrorist attacks in the US indicates that state and local governments rely on the federal sector for support after disasters occur. But these same governments are responsible for investing in infrastructure designed to reduce vulnerability to natural and man-made hazards. This division of responsibilities – regional governments providing protection from disasters and federal government providing insurance against their occurrence – leads to the tensions that are at the heart of our analysis. We show that when the federal government is committed to full insurance against disasters, regions will have incentives to under-invest in costly protective measures. We derive the structure of the optimal second-best insurance system when regional governments choose investment levels non-cooperatively and the central government cannot verify regional investment choices. Normally (though not always) this will result in lower intergovernmental transfers and greater investment. However, the second-best transfer scheme suffers from a time-inconsistency problem. Ex-post, the central government will be driven towards equalizing rather than the second-best grants, which results in a type of soft budget constraint problem. Sub-national governments will anticipate this and reduce their investment in protective infrastructure even further. We discuss these results in light of recent disaster policy outcomes in the US.