This paper analyzes the impact of economic downturns on the revenue and expense sides of city financing for the period 2003 to 2009 using a convenience sample of the audited end of year financial reports for thirty midsized US cities. The analysis focuses on whether and how quickly and how extensively revenue and spending directions from past years are altered by recessions. A seven year series of Comprehensive Annual Financial Report (CAFR) data serves to explore whether cities' revenues and spending, especially the traditional property tax and core functions such as public safety and infrastructure withstood the brief 2001 and the persistent 2007 recessions? The findings point to consumption (spending) over stability (revenue minus expense) for the recession of 2007, particularly in 2008 and 2009.
Using an 'Austrian' economic framework, rather than the traditional neoclassical economic or progressivism framework, this paper explores the extent to which accrual based accounting measurement systems add to or detract from value relevant accounting information, in public sector settings. Austrian economics provides insights to this issue by offering a more nuanced theoretical account of the role of knowledge, institutions and subjectivism in analyzing economic phenomena, than do traditional neoclassical economics or progressivism. The paper concludes that Austrian economics are a potential framework that informs us about the problem of misuse of information in public, noncompetitive situations.
This paper illustrates how two contemporary economic traditions - New Institutional and Austrian economics - may be used to add insight into the organization and governance of public sector investment programs. When combined, these frameworks offer a theoretical foundation that may be used for purposes of assessing relative levels of agency and transactions costs within different institutional settings. The insights provided suggest that one option for reducing these costs is to “outsource” the public sector investment function. The theories explored in the paper are not panacea for dealing with agency and transaction costs, but they do draw attention to key institutional characteristics that influence their size.
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