City and Suburb: The Anatomy of Fiscal Dilemma

A MODEL WAS DEVELOPED TO ANALYZE THE COMMON TECHNOLOGICAL AND FISCAL FORCES WHICH AFFECT BOTH THE DECLINING CENTRAL CITY AND THE EXPANDING SUBURBS. THE MODEL CONSIDERS TWO SECTORS, THE PUBLIC SECTOR WHICH PRODUCES GOODS AND SERVICES AND THE PRIVATE SECTOR WHICH PRODUCES MARKETABLE OUTPUT. THESE ARE...

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Bibliographic Details
Published in:Land economics 1975-05, Vol.51 (2), p.133-138
Main Authors: Dusansky, Richard, Nordell, Lawrence P.
Format: Article
Language:English
Subjects:
Aggregate income
Central business districts
Cities
Economic growth rate
Elasticity of demand
Expansion
Income elasticity of demand
Public sector
Suburban
Suburbs
Tax base
Tax revenues
Unit costs
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Summary:A MODEL WAS DEVELOPED TO ANALYZE THE COMMON TECHNOLOGICAL AND FISCAL FORCES WHICH AFFECT BOTH THE DECLINING CENTRAL CITY AND THE EXPANDING SUBURBS. THE MODEL CONSIDERS TWO SECTORS, THE PUBLIC SECTOR WHICH PRODUCES GOODS AND SERVICES AND THE PRIVATE SECTOR WHICH PRODUCES MARKETABLE OUTPUT. THESE ARE CONSIDERED WITH RESPECT TO A SINGLE INOUT, PRODUCTION FUNCTION, THE RELATIVE OUT-PUT SHARES, AND THE FLOW OF TAX-REVENUE. THE FISCAL CRISIS OCCURS WHEN AN EXPENDITURE-REVENUE GAP IS CREATED. THIS IS THE RESULT OF A DIFFERENTIAL CREATED BETWEEN THE GROWTH RATE OF EXPENDITURES ON PUBLIC OUT-PUT AND THE GROWTH RATE OF TAX-REVENUES. AS PEOPLE MOVE FROM THE CITIES TO THE SUBURBS, THE TAX-BASE ALSO SHIFTS, RESULTING IN TAX REVENUES SUFFICIENT FOR GROWTH IN THE SUBURBS BUT NOT IN THE CITIES. POLICIES ARE REQUIRED THAT RESULT IN A LOW INCOME ELASTICITY OF DEMAND FOR PUBLIC OUT-PUT AND A LARGE GROWTH RATE OF INCOME IN CITIES. CHARTS.
ISSN:0023-7639
1543-8325
DOI:10.2307/3145582