State and Local Government Utility Maximization According to Garp

Larry DeBoer ()

Public Finance Review, 1986, vol. 14, issue 1, 87-99

Abstract: Many recent state and local expenditure determinant studies have modeled public choice as the result of the constrained maximization of a utility function. This model has been tested using particular utility functions, but rejection of constrained maximization under such a test may imply only the inconsistency of the data with the chosen functional form. A nonparametric test, based on the generalized axiom of revealed preference (GARP), exists that shows whether a price-quantity data set may be rationalized by the constrained maximization of any utility function. This test is applied to various state and local government cross-section and time series data sets. It appears that the constrained maximization model can explain the bulk of public price-quantity observations in each data set tested. The results tentatively suggest that time series data are more likely to be consistent with utility maximization than are cross-section data.

Date: 1986
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:14:y:1986:i:1:p:87-99

DOI: 10.1177/109114218601400105

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