What Drives Municipal Capital Investment? A Long-panel Data Analysis of U.S. Central Cities

Abstract

Cities across the United States are facing a severe infrastructure deficit. The challenge of financing infrastructure capital assets has emerged as one of the most urgent issues of the country. Using a panel data consisting of 100 American central cities from 1988 to 2012, this research reveals that city governments are responsive to sociodemographic forces and citizens’ demands, but their abilities to finance capital assets are constrained by city fiscal institutions and revenue capacity. This research also compares the determinants of different components of city capital outlays such as road and water utility capital expenditures.