The federal government buys many goods and services that are expected to increase private-sector productivity—that is, the ability of the private-sector workforce, using the stock of capital, to produce goods and services. Such purchases by the federal government are called investment. In an earlier report, the Congressional Budget Office examined various aspects of federal investment itself, s...

We examine the relationship between fiscal decentralization and the functional composition of public expenditures. Using a distance-sensitive representative agent model, we hypothesize that higher levels of fiscal decentralization induce agents to demand increased production of publicly provided private goods. We test this hypothesis using an unbalanced panel data set of 59 developed and develo...

In a laboratory experiment with salient rewards, subjects were endowed with money and waiting time. Preferences for waiting time were elicited both as a private good by means of a series of second price auctions, i.e., in a non-induced values framework, and as a public good in the scope of a voluntary contribution game. Our data supports the Lindahl equilibrium as a descriptive model of behavio...

This paper extends theories of public goods to interactive communication systems. Two key public communication goods are identified. Connectivity provides point-to-point communication, and communality links members through commonly held information, such as that often found in databases. These extensions are important, we argue, because communication public goods operate differently from tradit...

a r t i c l e i n f o JEL classification: D78 H42 H75 I24 O15 Keywords: Fiscal federalism Local government expenditures Political economy Education policy Municipalities What drives governments with similar revenues to provide very different amounts of goods with private sector substitutes? Education is a prime example. I use exogenous shocks to Brazilian municipalities' revenue during 1995–200...

We study a large economy model in which individuals have private information about their productive abilities and their preferences for public goods. A mechanism design approach is used to characterize implementable tax and expenditure policies. A robustness requirement in the sense of Bergemann and Morris (2005) yields individual incentive compatibility constraints that are equivalent to those...