The Capitalization of Fiscal Residuals, A General Equilibrium Analysis

Richard Arnott

Working Paper from Economics Department, Queen's University

Abstract: Following the work of Oates, there has recently been considerable interest in the capitalization into land values of the differences in fiscal benefits between communities. We argue the while the partial equilibrium argument which forms the basis of the capitalization hypothesis is casual and misspecified, the conclusion derived from it, that in long-run competitive equilibrium in an open economy with identical individuals fiscal residuals are capitalized, is correct. However, the measured degree of capitalization in a realistic setting is unlikely to tell us much of interest.

Pages: 10
Date: 1976
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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:206

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