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Municipal Capital Maintenance and Fiscal Distress

Mary Bumgarner^1,2; Jorge Martinez‐Vazquez^1,2; David L. Sjoquist^1,2

¹ Kennesaw State University · ² Georgia State University

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.

DOI

10.2307/2109684

Volume

73 (1)

Pages

33

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