Robert P. Inman

Testing political economy’s ‘as if’ proposition: is the median income voter really decisive?

Recent empirical and normative analysis of local government fiscal performance has made good use of the Downsian median voter model as a behavioral specification for how local fiscal allocations are decided. The central assumption behind all these studies is that the median voter is the family with the median income. This paper statistically tests the validity of this assumption for a sample of 58 Long Island school districts. For at most 1/4 of the districts can we reject the assumption, and even for these districts, the predictive bias of the median-income-voter-as-decisive assumption never exceeds 20%.

Designing tax policy in federalist economies: An overview

Abstract The emerging economic federations of the European Union, Russia, and South Africa, along with the established federations in Australia, Canada, and the United States, confront the task of designing the institutions for federal fiscal policy. This paper reviews the literature on the design of tax policy in federalist economies. We conclude that taxation by lower level governments can lead to significant economic inefficiencies and inequities. The usual ‘assignment’ view of federalis recommends central government policies — for example, resident-based taxation or grants-in-aid — to correct these failures. These recommendations assume that the central government will act as a benevolent social planner. The ‘political economy’ view of federalism suggests that this assumption is in error and that additional federalist institutions must be considered. Alternative legislative structures and constitutional rules are considered.

Markets, governments, and the "new" political economy

Publisher Summary This chapter focuses on the micro-economic reasons for market failure and the micro-political analysis of government performance. Governments provide goods and services directly, redistribute income, and regulate economic relations. The chapter reviews recent recommendations for the institutional reform of the budgetary process. The new political economy is concerned with the most basic question of economic policy: It discusses the circumstances where markets or governments are preferred as the institution for allocating societal resources. The new political economy is the sophistication of analytic technique. The voting process can protect against dictatorship but generally at the cost of social efficiency. In Western societies, the decision has been made to protect democracy; the task then is to search for the most efficient collective choice process consistent with this norm. The results of this examination emerge in the new quantitative political economy and the empirical examination of government spending, taxation, and regulation.

The Economic Consequences of Debilitating Illness: The Case of Multiple Sclerosis

The economic consequences of debilitating illness are defined and then estimated for one such illness--multiple sclerosis. Economic losses are defined as the consumption losses to the affected household because of illness. These losses are measured as the change in earnings of all family members plus the increase in gross (not out-of-pocket) medical costs. Earnings models are specified and estimated, and gross medical costs calculated for multiple sclerosis. The average annual loss to the multiple sclerosis household is

Should Suburbs Help Their Central City

5,336 per year in 1976 dollars; the estimated aggregate decline in consumption for the year 1976 was

Transfers and Bailouts: Institutions for Enforcing Local Fiscal Discipline

0.656 billion. Lifetime costs (discounting by 0.06) total

A generalized congestion function for highway travel

207,200 per multiple sclerosis household and

Disability indices, the economic costs of illness, and social insurance: The case of multiple sclerosis

25.50 billion for society as a whole for the current (1976) pool of multiple sclerosis patients, and

Federalism and the Democratic Transition: Lessons from South Africa

30.45 billion for all future multiple sclerosis patients. Copyright 1987 by MIT Press.

Micro-fiscal planning in the regional economy: A general equilibrium approach

Previous arguments for suburb-to-city fiscal assistance have stressed spillovers from city services to suburban residents or the fact that suburban residents (should?) care about their citys poor. We explore the validity of a third possible argument: Suburban residents - even those who never use city services nor care about the citys poor - may wish to support the citys budget if that budget contributes to the productive efficiency of the citys private economy and if suburban residents consume the output of city firms. The analysis here presents first-difference regressions of city and suburban home values, city and suburban population, and city and suburban incomes for 217 MSAs for the decade 1980-1990. We find that weak city fiscal institutions and increases in the rate of city poverty depress both the citys and the suburbs private economies. The econometric results are replicated in a general equilibrium model of an open MSA economy. Our results suggest each suburban family in an average MSA will find it in their economic self-interest to pay from