Some cities have fewer taxable resources and higher costs for providing public services than do other cities. The result, which is widely regarded as unfair, is a wide variation in the ability of cities to supply public services. But our understanding of these fiscal disparities, particularly on the cost side, is limited. This paper provides a general treatment of fiscal disparities by incorporating input and environmental costs into a model of local expenditure determination, investigating the consequences of fiscal disparities in a system of local governments (including housing price adjustments and migration), and designing intergovernmental grants to offset fiscal disparities.
ASJC Scopus subject areas
- Economics and Econometrics