On the Dynamics of Community Development

Levon Barseghyan and Stephen Coate

No 23674, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper presents a dynamic political economy model of community development. In each period, a community invests in a local public good. The community can grow, with new housing supplied by competitive developers. To finance investment, the community can tax residents and issue debt. In each period, fiscal decisions are made by current residents. The community's initial wealth (the value of its stock of public good less its debt) determines how it develops. High initial wealth leads to rapid development. Low initial wealth leads to gradual development that is fueled by community wealth accumulation. Wealth accumulation arises from the desire to attract more households to share the costs of the public good. The long run size of the community can be too large or too small and development may proceed too slowly. Nonetheless, some development occurs and, at all times, public good provision is efficient.

JEL-codes: H41 H7 H72 H74 (search for similar items in EconPapers)
Date: 2017-08
New Economics Papers: this item is included in nep-mic, nep-pbe, nep-pub and nep-ure
Note: PE POL
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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