local government structure and public expenditures the law of 1 n postulates a positive relationship betweenthe number of democratically electedrepresentative districts and governmentspending strong support for thisrelationship exists in legislatures in theunited states at both the state andnational level and across countries fewstudies have examined this relationship atthe local level despite the fact that localgovernments operate under constraintssimilar to those faced by representativelegislatures using a sample of georgiacounties we find the number of countycommissioners to be positively correlatedwith county government expenditures indicating support for the law of 1 nat the local level

is there a leviathan in your neighborhood this paper measures effects of decentralization in local government hierarchies on local public sector size this sector shrinks if decentralization encourages competition among governments it expands if decentralization sacrifices scale economies in a sample of 3 022 counties larger county governments reduce competition and increase aggregate local public sector size relative to aggregate county income more cities and towns increase competition and reduce its size more special and school districts sacrifice scale economies and increase it two recent articles have attempted to identify the effects of decentralization in state and local government on the size of the state and local public sector wallace oates 1985 finds no important effects michael nelson 1987 finds modest evidence that increased competition among government units reduces the size of the public sector this article demonstrates that the effects of decentralization are important and complex decentralization which encourages competition reduces the size of the local public sector decentralization which discourages scale economies increases it

cournot oligopoly reconsidering cournot the cournot equilibrium is consistent this article uses an infinite regress model of firm level decisions to find a rational expectations equilibrium for a duopoly and to relate concepts of conjectural variations and consistency to the cournot equilibrium the model derives a conjectural variation instead of assuming it in particular the cournot equilibrium is shown to be consistent in the usual sense of the literature the conflict between notions of consistent conjectures and the cournot equilibrium results from a compounding problem inherent in the earlier models we extend these results to the n firm problem alternatively the article can be viewed as providing a purely static model that generates the cournot equilibrium without reference to conjectures or quasi dynamics

ecological economic analysis of wetlands scientific integration for management and policy abstract wetlands all over the world have been lost or are threatened in spite of various international agreements and national policies this is caused by 1 the public nature of many wetlands products and services 2 user externalities imposed on other stakeholders and 3 policy intervention failures that are due to a lack of consistency among government policies in different areas economics environment nature protection physical planning etc all three causes are related to information failures which in turn can be linked to the complexity and invisibility of spatial relationships among groundwater surface water and wetland vegetation integrated wetland research combining social and natural sciences can help in part to solve the information failure to achieve the required consistency across various government policies an integrated wetland research framework suggests that a combination of economic valuation integrated modelling stakeholder analysis and multi criteria evaluation can provide complementary insights into sustainable and welfare optimising wetland management and policy subsequently each of the various components of such integrated wetland research is reviewed and related to wetland management policy

cowboys cornucopians and long run sustainability abstract in the 1970s there was a lively debate on the relationship between natural resource availability and long run economic growth one side has been characterized as neo malthusian it emphasized the limited global stockpile of critical natural resources from cobalt to petroleum and the need to curb population and economic growth the other side of the debate has been characterized as cornucopian it emphasized the creative powers of technology and free markets to find substitutes for any and all scarce resources this paper argues that the original dichotomy was false it did not adequately represent either the real positions of most conservative business and political leaders today nor did it reflect the currently emerging consensus among environmentalists the former do not concern themselves with long run issues at all nor do they take a global view of the problems of mankind rather they argue from the standpoint of short run national and corporate interest environmentalists on the other hand do not fit the neo malthusian world view which emphasizes the role of natural resources and land as factors of production and points to the limited supply of renewable resources and the inevitable exhaustion of non renewables the most important scarcities in the emergent environmentalist world view are largely outside the market domain soil fertility clean fresh water clean fresh air unspoiled landscapes climatic stability biological diversity biological nutrient recycling and environmental waste assimilative capacity there are no plausible technological substitutes for these the irreversible loss of species and ecosystems and the buildup of greenhouse gases in the atmosphere and of toxic metals and chemicals in the topsoil groundwater and in the silt of lake bottoms and estuaries are not reversible by any plausible technology that could appear in the next few decades finally the great nutrient cycles of the natural world carbon oxygen nitrogen sulfur and phosphorus require that constant stocks in each environmental compartment and balanced inflows and outflows these conditions have already been violated by large scale and unsustainable human intervention

valuation and management of wetland ecosystems we recently completed a study of wetland values in coastal louisiana that employed both willingness to pay and energy analysis based methodologies and were able to bracket a range of values within which we feel fairly confident the true value lies however a large amount of uncertainty remains our current estimates of the total prsent value of an average acre of natural wetlands in louisiana are us 2429 6400 per acre assuming an 8 discount rate to 8977 17000 per acre assuming a 3 discount rate at the lowest value the current annual rate of loss of louisiana wetlands 50 sq miles per year is worth about 77 million at the largest value it is worth about 544 million in this paper we a discuss the fundamental theoretical and practical problems underlying natural resources valuation b summarize our methods and findings for louisiana wetlands and c elaborate on some of the more recalcitrant problems attending applied natural resource valuation including discounting and dealing with uncertainty and imprecision the discount rate makes more difference in the final result than any other one factor and yet there is much disagreement about the appropriate approach to discounting natural resources we discuss the discounting problem as applied to natural resources and argue for lower discount rates for valuing renewable natural resources than apply for other aspects of the economy it now seems clear that no reasonable amount of effort will produce very precise estimates of wetland values and we suspect this is also the case for several other classes of natural resources we elaborate a wetlands asurance bonding system to address these problems

local government internal structure external constraints and the median voter this paper examines how internal structure and external constraints affect local government ability to meet voters demands it applies the revealed preference method to us counties to identify those that fail to satisfy the pure democracy outcome of the median voter hypothesis mvh probit analysis identifies the factors associated with counties that satisfy the mvh internal government structure does not matter but restricting home rule increases the likelihood of satisfying the mvh equilibrium the latter result consistent with the leviathan model the systematic differences found for urban and rural county governments reinforce this conclusion

the new approach to wilderness preservation through benefit cost analysis over the last 15 years economists of resources for the future led by john krutilla have been developing a new approach to wilderness preservation this paper offers a concise exposition of their approach and adds a few new steps the basic ingredient of the new approach is a perception of declining net benefits of wilderness development and rising net benefits of wilderness preservation over time these alter the entire shape of the benefit cost analysis of potential development the new steps involve reversibility postponability and recognition of multiple interest rates

leviathan and fiscal illusion in local government overlapping jurisdictions this paper integrates twomodels of local government behavior leviathan and fiscal illusion into theframework of overlapping jurisdictions estimation of the leviathan and fiscalillusion variables without accounting forvertical effects between overlappingjurisdictions results in overestimation ofthe horizontal effects using a medianvoter model and municipal and county datawe find support for the leviathan modelusing traditional tests these effects arelargely offset however when the test isset within the context of the verticalrelationship we find that municipal percapita expenditures and county per capitaexpenditures are symmetricallycomplementary

wilderness development decisions and the krutilla fisher model the case of scotland s flow country this paper reports some results from an empirical study of wilderness management in the flow country of northern scotland the flow country is an area of extensive blanket bog characterized by extensive populations of internationally rare breeding birds and by a very distinctive landscape the principle threat to the area at present comes from large scale afforestation this activity is subsidized by the state through the forestry commission and yet seems likely to create irreversible external cost flows the economic efficiency of continued planting in the area is tested for using the krutilla fisher model preservation benefits accruing to both users and non users are estimated using contingent valuation

deciding to provide local decisions on providing social welfare fiscal federalism predicts local governments will avoid social welfare expenditures owing to capital mobility across local jurisdictions yet census of governments data consistently show that many local governments provide one or more social welfare functions and moreover many jurisdictions provide these functions without federal or state intergovernmental support this article finds evidence that while local expenditures are largely driven by fiscal capacity and federal and state assistance local decisions on providing social welfare functions and participating in intergovernmental revenues are primarily affected by degree of capital mobility and by local political factors consequently local governments exercise much greater autonomy over social welfare policymaking than fiscal federalism suggests

some evidence on the effect of the separation of spending and taxing decisions it is often argued that separation of public spending and taxing decisions engenders in the voter overoptimistic hopes that someone else will bear the cost of public services thereby inducing an increase in the size of government but are perceived tax prices systematically and persistently reduced by separation although in stock markets all agents expectations may be unbiased they may or may not be unbiased in political markets this paper analyzes the separation created in federal states when the central government finances local expenditures evidence from a dynamic decisive voter model is presented that indicates that the separation introduced by federal grants to canadian provinces did in fact reduce the perceived tax price of provincial public services and raise provincial expenditures the results suggest also that the effect of separation diminished over time

state mandates and interest group lobbying abstract we apply becker s 1983 model of political interest groups to state mandates on public expenditures and revenues of local governments we outline conditions under which interest groups increase localities output levels above the efficient level but political pressure at the state level will reduce spending toward the efficient level an implication of our model is that political lobbying at the local level occurs only because of its indirect effects on state mandated outcomes because the state ultimately decides the government service level interest groups payoffs to lobbying at the state level generally will exceed those at the local level

the median voter model across levels of government the median voter model provides a method of aggregating individual voter s demands to obtain community demand although higher level governments are often assumed to be less responsive to voters than lower level governments it remains an open question whether or not the median voter model which has been found to apply to the lowest tier of the federalist system extends to higher level governments we use the cox specification test to find that the ad hoc model dominates the median model for counties and states the county results are sensitive to the time periods budgetary structure and degree of urbanization

searching for leviathan comment and extension in a recent article wallace oates 1985 investigated whether fiscal decentralization tended to act as a constraining influence on the overall size of the public sector this hypothesis has been advanced by several alternative theories of government behavior including richard musgrave s 1959 model of how the distribution function of government would be carried out by subnational governments geoffrey brennan and james buchanan s 1980 leviathan model and the more traditional public choice model for example walter hettich and stanley winer 1984 all contend that the decentralization of tax and spending decisions introduces competition among governmental units seeking to attract citizens and other mobile resources and thereby constrains taxing power oates analyzed two data sets one pertaining to the state and local sector in the united states and the other consisting of a sample of 43 countries and found little empirical support for the decentralization hypothesis the purpose of this paper is to reconsider his analysis in the case of state and local governments specifically it will be argued that oates s measures of decentralization may be inappropriate to test the hypothesis furthermore by taking into account the structure or composition of local governmental jurisdictions within a state empirical support of the decentralization hypothesis can be marshaled for general purpose local governments such as counties and municipalities i measuring fiscal decentralization among the states

valuing environmental functions tropical wetlands recent studies have suggested that tropical wetland systems may have a crucial economic role to play in development the following paper provides an overview of these benefits using the general framework of cost benefit analysis as the methodological approach to assessing wetland values an analysis of trade offs between conserving or converting tropical wetlands demonstrates that taking into account the opportunity cost of wetland loss leads to a lower level of conversion than would otherwise be the case finally the paper discusses the extensions and limitations of the production function approach as applied to valuing nonmarketed wetland benefits

the power to tax analytical foundations of a fiscal constitution preface 1 taxation in constitutional perspective 2 natural government a model of leviathan 3 constraints on base and rate structure 4 the taxation of commodities 5 taxation through time income taxes capital taxes and public debt 6 money creation and taxation 7 the disposition of public revenues 8 the domain of politics 9 open economy federalism and taxing authority 10 toward authentic tax reform prospects and prescriptions epilogue notes selected bibliography index

overlapping jurisdictions substitutes or complements this paper presents a simple model of the demand relationship between the activities undertaken by overlapping governments and uses the framework to estimate the relationship between municipal and county expenditures the empirical results reveal a complementary relationship between county and city general expenditures any public sector expansion effects of monopoly power at the county level will therefore be reinforced by greater municipal spending further expanding the total size of the local public sector on the other hand changes in county police and roads expenditures appear to have no strong stable impact on municipal police and roads expenditures respectively providing no reinforcing or offsetting municipal spending responses to decisions at the county level

fiscal illusion and the grantor government empirical studies indicate that unconditional intergovernmental grants have a flypaper effect several authors have modeled recipient government spending under fiscal illusion to explain this phenomenon in short grants reduce the perceived marginal cost of recipient government output this paper develops a more general model of illusion that incorporates the grantor government thereby eliminating inconsistencies encountered in previous models the more general model implies that grant finance increases the perceived marginal cost of grantor government output thus grant induced illusion should have two effects an increase in recipient output and a decrease in grantor output the empirical work supports this hypothesis

towards a credit network based early warning indicator for crises this paper presents an agent based model which underlines the importance of credit network and leverage dynamics in determining the resilience of the system defining an early warning indicator for crises the model reproduces macroeconomic dynamics emerging from the interactions of heterogeneous banks and firms in an endogenous credit network banks and firms are linked through multiple credit relations which derive from individual target leverage choices agents choose the more convenient leverage level according to a basic reinforcement learning algorithm simulations are calibrated on balance sheet data of banks and firms quoted in the japanese stock exchange markets from 1980 to 2012

searching for leviathan an empirical study in several papers and a recent book geoffrey brennan and james buchanan 1977 1978 1980 have put forth a striking and controversial view of the public sector drawing by analogy on the conventional theory of monopoly in the private sector they envision a monolithic government that systematically seeks to exploit its citizenry through the maximization of the tax revenues that it extracts from the economy from this perspective they develop a fiscal constitution whose central purpose is to constrain leviathan by limiting in various ways its access to tax and other fiscal instruments while the leviathan hypothesis has been the source of lively debate and a wide range of policy proposals it has not been the subject of much systematic empirical work or testing this is a matter of some importance since the policy implications of the leviathan view are disturbing to put it mildly in particular brennan and buchanan virtually stand on their heads many of the basic theorems in public finance for an efficient and equitable tax system if in fact the leviathan view is an inaccurate depiction of the functioning of the public sector the introduction of their policy proposals is likely to make a sorry mess of the fiscal system the leviathan model does however have some straightforward implications for observable fiscal behavior it is the purpose of this paper to examine one of these testable implications brennan and buchanan stress that fiscal decentralization is itself a powerful constraint on leviathan competition among governments in the context of the interjurisdictional mobility of persons in pursuit of fiscal gains can offer partial or possibly complete substitutes for explicit fiscal constraints on the taxing power 1980 p 184 such competition among governments in a federal system that places heavy reliance on local fiscal decisions will greatly limit the capacity of leviathan to channel resources into the public sector in short as indicated by the epigraph to this paper the leviathan model implies that other things equal the size of the public sector should vary inversely with the extent of fiscal decentralization 2