On the Relationship between Mobility, Population Growth, and Capital Spending in the United States

38 Pages Posted: 11 Dec 2009

See all articles by Marco Bassetto

Marco Bassetto

Federal Reserve Bank of Chicago

Leslie McGranahan

Federal Reserve Bank of Chicago

Multiple version iconThere are 2 versions of this paper

Date Written: November 30, 2009

Abstract

In this paper, we assess the empirical relationship between population growth, mobility, and state-level capital spending in the United States. To evaluate the magnitude of the coefficients, we introduce an explicit, quantitative political-economy model of government spending determination, where mobility and population growth generate departures from Ricardian equivalence. Our estimates find strong responses in the level of capital provision per capita to these demographic movements; in fact, the resulting coefficients are stronger than the model delivers. Regression coefficients on population growth and mobility also yield opposite implications for the direction to which spending is distorted by the political-economy friction, posing a further challenge.

Keywords: public goods, golden rule, population growth, mobility, capital spending

JEL Classification: E62, H72, D78

Suggested Citation

Bassetto, Marco and McGranahan, Leslie, On the Relationship between Mobility, Population Growth, and Capital Spending in the United States (November 30, 2009). FRB of Chicago Working Paper No. 2009-25, Available at SSRN: https://ssrn.com/abstract=1521156 or http://dx.doi.org/10.2139/ssrn.1521156

Marco Bassetto (Contact Author)

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604
United States

Leslie McGranahan

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604
United States
312-322-5023 (Phone)
312-322-2357 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
31
Abstract Views
460
PlumX Metrics