Working Paper Number
WP #11018, October 2011
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.
Published in Review of Regional Studies, Vol. 43 no. 2,3 (Winter 2013): 155-173.
H2, H4, H7
Premkumar, Deepak; Quackenbush, Austin; Artz, Georgeanne M.; and Orazem, Peter, "If you build it, will they come?: fiscal federalism, local provision of public tourist amenities, and the Vision Iowa fund" (2011). Economics Working Papers (2002–2016). 57.