Estimating Costs and Benefits of Economic Growth: A CGE-Based Study of Tax Incentives in a Rapidly Growing Region Report as inadecuate




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Municipalities have used tax incentives to attract manufacturingfirms to counteract market failures, mobilize resources in blighted areas,and engage in bidding wars with other jurisdictions. These reasons havetypically been remedies for regions experiencing unemployment andlow growth. However, high growth areas still use tax incentives to managegrowth. In these cases, the costs of growth, especially related to congestion,pollution, costs of city services and rising prices, must be comparedto economic benefits resulting from a tax incentive. The case studyin this paper is based on a proposal to the city of Fort Collins, Coloradoby Hyundai Corporation, who requested a $25.5 million use tax rebate.This paper uses a data intensive computable general equilibrium (CGE)model to estimate endogenously the costs and benefits of growth. Resultsof the analysis suggest an $18.15 million rebate was warranted.

Subject(s): Community/Rural/Urban Development

Issue Date: 2004

Publication Type: Journal Article

PURL Identifier: http://purl.umn.edu/132285 Published in: Journal of Regional Analysis and Policy, Volume 34, Issue 4

Total Pages: 20

Record appears in: Mid-Continent Regional Science Association > Journal of Regional Analysis and Policy





Author: Byers, Steven ; Cutler, Harvey ; Davies, Stephen P.

Source: http://ageconsearch.umn.edu/record/132285?ln=en







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