The Impact of Debt Financing on the Level of Capital Spending

Myungsoon Hur

International Review of Public Administration, 2001, vol. 6, issue 2, 91-101

Abstract: This paper examines whether the debt illusion hypothesis holds at the local level. Generally, municipal bonds are issued to finance capital spending. However, capital costs could be funded by current revenues or borrowing. If taxpayers perceive debt financing to be less costly than current taxation, reliance on debt tends to incur larger public spending. By utilizing a sample of New Jersey municipalities in the U.S., this study found that municipalities relying on more debt spent more on capital investments than those relying on less debt.

Date: 2001
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/12294659.2001.10804983 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:rrpaxx:v:6:y:2001:i:2:p:91-101

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RRPA20

DOI: 10.1080/12294659.2001.10804983

Access Statistics for this article

International Review of Public Administration is currently edited by Ralph Brower

More articles in International Review of Public Administration from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().