Explorations in local public finance
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While there have been many studies on public finance at the national and subnational levels, the strikingly large heterogeneity and disparity between localities call for a thorough local-level analysis. This dissertation comprises four essays on local public finance and explores several important issues, including the relationships between housing prices, property tax, local infrastructure investment, countercyclical debt policy, and expenditure stability. Three different data sets are used in the essays: national and state aggregates of local finance data from the U.S. census (1960-2008), Georgia local data (159 counties and 536 municipalities, 1985-2011), and parcel/household level data of 46 counties in Georgia with coverage ranging from 3 to 10 years for assessment and over 40 years for sales. Specifically, the first essay analyzes the dynamics of housing and land prices. The second essay investigates the relationships among property tax, local infrastructure investment, and housing prices. The third essay examines the optimal debt use for local governments, finding that different localities have distinct debt policies due to differences in fiscal capacities and borrowing costs. Connecting the above three essays, the fourth essay deconstructs both the revenue and expenditure structures of different types of local governments (counties and municipalities) and estimates the impacts of revenue compositions and infrastructure investment on expenditure stability. This dissertation contributes to the literature by providing both theoretical frameworks and empirical evidence that: (1) reconcile different perspectives on relationships between the dynamics of housing and land prices, (2) connect local infrastructure to household payment of the property tax and extend previous studies from metro cities to a comparison between urban and rural counties, (3) offer an optimal theoretical path of countercyclical debt use and are among the first to investigate the effects of local fiscal characteristics on countercyclical debt policy, and (4) finally, decompose the impacts of revenue and expenditure structures on local expenditure stability. The results shed light on trends, fluctuations and regional variations in housing prices, help improve the accuracy of property assessment, and contribute effectively to local policy designs regarding economic development and infrastructure investment decisions.