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Municipal Capital Maintenance and Fiscal Distress

Bumgarner, Mary
Martinez-Vazquez, Jorge
Sjoquist, David
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Abstract

This paper formalizes and empirically tests the hypothesis that the deficient maintenance of public infrastructure is caused by fiscal distress. We utilize a production-decision framework in which public officials combine maintenance and new capital to produce a desired level of capital services. The behavior implied in the fiscal distress hypothesis is treated as perverse deviations from the optimal production path. The empirical findings from cross-sectional expenditures data give support to the fiscal distress hypothesis.

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<p>Originally published in:</p> <p>Bumgarner, Mary, Jorge Martinez-Vazquez, and David L. Sjoquist. "Municipal Capital Maintenance And Fiscal Distress." Review Of Economics & Statistics 73.1 (1991): 33.</p> <p>Posted with the permission of the publisher, MIT Press.</p>
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1991
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Bumgarner, Mary, Jorge Martinez-Vazquez, and David L. Sjoquist. "Municipal Capital Maintenance And Fiscal Distress." Review Of Economics & Statistics 73.1 (1991): 33.
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