The fiscal behavior of municipal governments: 1905-1930

Abstract

This report discusses a new set of annual U. S. municipal expenditure estimates. These estimates deal with the 1905-1930 period. While these expenditures are seen to be influenced by urbanization and price inflation, it is clear that real per capita spending rose substantially during the period. The distribution of municipal spending between current and capital accounts is seen to be associated with relative price change. A model of the structure of budget decisions-emphasizing an incremental budgeting format-is developed. Estimates of the structural parameters suggest that this model adequately represents the data; and that municipal decision makers responded in a regular and rational fashion to shifts in relative prices and nominal sources of funds. © 1976.