Fiscal Surplus Research Articles

An Econometric Model of the Flight to the Suburbs

Interrelated city-suburbs residential-location equations for middle- and upper-income-class families and for poor families are estimated using cross-sectional data on 87 large metropolitan areas in 1960. We find that residential-location decisions of middle- and upper-income-class families are determined, among other things, by the city-suburbs rent differentials, by fiscal surplus differentials, and (negatively) by the location of poor families; additional hypotheses concerning interactions with family income were suggested and statistically accepted. The location equations for the poor families involved cost and fiscal differentials and a proxy variable for employment opportunities.

The Specie Circular and Sales of Public Lands: A Comment

The chronology of events in 1836 surrounding Jackson's Specie Circular and the Act to Regulate the Deposits of Public Money, under which the Federal fiscal surplus was distributed to the states, has never been much in dispute. The orthodox analysis of these events likewise has been almost universally accepted. The Specie Circular has been seen as a device that provoked an increase in the demand for hand-to-hand specie in the West where the public lands were being sold, at the same time that specie was needed in the East to effect the distribution of the surplus. The monetary system could not have its specie in two places at once, the argument has been, and the attempt to do so led to the disastrous breakdown of the banking system and to the ensuing business recession of 1837.

Government Debt as a Generator of Economic Growth

1CONOMISTS are generally aware of the impact of fiscal policy on the income stream and have prescribed the appropriate fiscal measures for expanding or contracting the flow of income. They have also given attention to the expenditure-stabilizing effect of the net stock of privately-held salable assets, when levels of prices and income fluctuate. However, they have paid little attention to the role of fiscal policy as a generator or destroyer of such assets. A budgetary surplus or deficit always has an impact on the balance sheets of the private sector, in addition to its impact on the income-expenditure accounts. This discussion is devoted to the effect of fiscal policy on the asset items in private balance sheets and the implications of this for the generation of income. The first section attempts to show that the government debt is one of the variables determining household expenditure decisions. From this it is shown that fiscal deficits or surpluses have cumulative effects on national income which are not present for corresponding magnitudes of private expenditure. The second section considers how the public debt should behave in order to keep national income growing at the full-employment level. It shows not only that the public debt must continue to grow in order to maintain full employment, but that for many rates of real income growth it must grow at a faster rate than income itself, given the model here considered.