Community development by public wealth accumulation

Levon Barseghyan and Stephen Coate

Journal of Urban Economics, 2021, vol. 121, issue C

Abstract: This paper presents a dynamic political economy model of community development. The model highlights the role of public wealth accumulation in development. A community’s wealth is the difference between the value of its publicly-owned assets and liabilities. Wealth accumulation arises when residents tax-finance investment in durable public goods or pay down public debt. It stimulates future development because of the fiscal externality created by the collective ownership of community wealth. Moreover, when this development occurs, future residents have an incentive to engage in further accumulation because the cost can be spread over a larger group. In this way, public wealth accumulation can fuel gradual community development.

Keywords: Community development; Local government debt; Public investment (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:juecon:v:121:y:2021:i:c:s0094119020300681

DOI: 10.1016/j.jue.2020.103297

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