If you build it, will they come?: fiscal federalism, local provision of public tourist amenities, and the Vision Iowa fund

Deepak Premkumar, Austin Quackenbush, Georgeanne Artz and Peter Orazem

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: The philosophy of fiscal federalism presumes that local communities will under- or over-provide public amenities in the presence of externalities. We test this hypothesis using data from Vision Iowa, a state program which provided partial funding to communities to build tourist attractions. We find a 1% increase in investment increased county taxable retail sales 0.9%. The State's return, from program-induced sales tax revenue, averaged 9.2% annually. Local communities' returns averaged 0.9% and we find a significant increase in surrounding areas' sales. This suggests that without state subsidies, communities would undersupply public amenities aimed at attracting visitors.

Date: 2011-10-09
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Related works:
Journal Article: If You Build it, Will They Come?: Fiscal Federalism, Local Provision of Public Tourist Amenities, and the Vision Iowa Fund (2013)
Working Paper: If You Build It, Will They Come?: Fiscal Federalism, Local Provision of Public Tourist Amenities, and the Vision Iowa Fund (2013)
Working Paper: If You Build It, Will They Come?: Fiscal Federalism, Local Provision of Public Tourist Amenities, and the Vision Iowa Fund (2011)
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