Papers by Paul (Gary) Wyckoff
Estimating Infrastructure Needs: Methods and Controversies 2 In this article, economist Paul Gary... more Estimating Infrastructure Needs: Methods and Controversies 2 In this article, economist Paul Gary Wyckoff examines the pros and cons associated with three alternative measures of capital-stock needs: technical estimates,based on the judgments of experts (such as safety engineers and urban planners); simple comparison studies, which look at the expenditures of other, similar cities; and economic estimates, which result from an approach developed by the author in an earlier working paper. In constructing economic estimates, the author compares the expenditures of each city with those of a typical city in the sample, after accounting for the features of the city that affect the need for capital stock (for example, population, land area, and age of capital stock). The article illustrates these three alternatives, using bridge condition and highway spending data from ten midwestern urban areas. Nonbanking Operations of Bank Holding Companies 11 Under current law, banking organizations are free to enter a variety of nonbanking activities. Proponents and opponents of this trend have identified a large number of potential benefits and costs, but there have been relatively few empirical studies of the non banking operations of banking organizations. To provide insight on this issue, economist Gary Whalen examines the performance of the nonbanking subsidiaries of the 25 largest and 60 smaller regional bank holding companies over the 1981-82 interval.
Economic commentary, 1984
A discussion of proposals to reform the federal income tax system, and an analysis of the economi... more A discussion of proposals to reform the federal income tax system, and an analysis of the economic and political issues surrounding flat-tax reform proposals.
Econometric Reviews, 1984
In this article, economist Paul Gary Wyckoff examines the pros and cons associated with three alt... more In this article, economist Paul Gary Wyckoff examines the pros and cons associated with three alternative measures of capital-stock needs: technical estimates,based on the judgments of experts (such as safety engineers and urban planners); simple comparison studies, which look at the expenditures of other, similar cities; and economic estimates, which result from an approach developed by the author in an earlier working paper. In constructing economic estimates, the author compares the expenditures of each city with those of a typical city in the sample, after accounting for the features of the city that affect the need for capital stock (for example, population, land area, and age of capital stock). The article illustrates these three alternatives, using bridge condition and highway spending data from ten midwestern urban areas.
National Tax Journal, 1987
Specification (2) is correct because, by controlling the decision-making of the community, the me... more Specification (2) is correct because, by controlling the decision-making of the community, the median voter can move his share of unconditional aid (TS*BG) in and out of the public sector at will, so those resources are just as good as private income to him. If, for example, the median voter decided to use all of this aid for private purposes, the aid would be used to lower local taxes and the median voter's after-tax income would rise by TS*BG. Turnbull argues that if coefficient ai is used in place of blt the estimate of the tax price elasticity of demand will be biased toward zero. Increases in TS actually have two effects: first, they increase the tax price of a unit of public goods; and second, they increase the median voter's total income (Y + TS*BG). This second effect occurs because an increase in the median voter's tax share also increases his claim on resources, like unconditional aid, which are given to the entire community.
This study has two major themes. Theoretically, it unifies three competing theories of local publ... more This study has two major themes. Theoretically, it unifies three competing theories of local public choice into one more general model and develops new empirical implications from these theories. Empirically, the paper contains a test of this new model ( and its three subcases) using expenditure data for 115 small and medium-sized Michigan cities. The data confirm the existence of significant bureaucratic influence on the expenditures of these cities. The model developed in this study relaxes the assumptions inherent in the orthodox median voter model that the voter (or his elected representative) can simply dictate the amount of output to be produced, and that he can ascertain the true minimum cost of producing that output. Instead, the city departments that actually produce public goods are assumed to have an information advantage over the city council in knowing the actual minimum cost of output. The heads of these departments (the bureaucrats) utilize this information for their own purposes, either to "pad" the city's budget for unnecessary expenses (such as higher salaries and additional staff) or to increase each department's output and total budget. The study develops the empirical implications resulting from different assumptions about (1) the extent of the bureaucrats' information advantage, and (2) the preferences of these bureaucrats over different kinds of inefficiency. One important new implication of the bureaucratic paradigm is the explanation of "flypaper effects," in which lump-sum intergovernmental grants generate more expenditures than increases in the median voter's income. Under these theories, flypaper effects can occur because increases in income improve the voter's bargaining position with respect to city departments while increases in aid do not. This model is tested empirically by examining the responses of cities to changes in revenue sharing receipts and population levels when factors such as median income, density, and the median voter's tax share are held constant. When total expenditures are examined, the bureaucratic theories (especially the budget-maximizing case) offer a superior explanation of the facts in comparison with the median voter model. Capital expenditures appear to be heavily influenced by department heads, while current expenditures are not significantly affected.Ph.D.EconomicsUniversity of Michiganhttp://deepblue.lib.umich.edu/bitstream/2027.42/160450/1/8502960.pd
Economic Commentary, 1984
but a study of IDB use in Michigan found few diversification benefits.' Little of the IDB money w... more but a study of IDB use in Michigan found few diversification benefits.' Little of the IDB money was used in automobile-related industries (the state's dominant industry); the bulk of the money did aid other durablegoods manufacturing facilities, which suffer much the same pattern of cyclical peaks and troughs as the automobile industry. Currently, IDB use appears to be most efficiently targeted toward small businesses. The 1968 limitations drastically reduced the average size of IDB issues and concentrated their use in small-and medium-sized firms. Even here, however, targeting could be improved. The peculiar provisions of the 1968 targeting amendments, which define small businesses by capital assets rather than by sales or size of work force, allow large firms with many small, geographically dispersed facilities to benefit from IDB use? For example, a large discount retailer financed 96 stores in 19 states between 1975 and 1980 through the use of IDBs. In 1978 and 1979, 16 percent of the dollar volume of IDB sales aided companies on the Fortune 500 list of top nonindustrial firms or the Fortune 1,000 list of the largest industrial companies.l? On the other hand, the 1982 restrictions against-7. See CBO, Small Issue Industrial Revenue Bonds, pp. 70-71. CBO data for these 6 years provided 271 observations. The correlation between per capita income and IDB use was 0.273 and was significant at the 1 percent level. The correlation between the unemployment rate and IDB volume was 0.022, which was not significant at even the 10 percent level. The pattern of
Journal of Education Finance, 2001
Economic Commentary, 1984
Although Congress and the administration are always talking about tax reform, there is currently ... more Although Congress and the administration are always talking about tax reform, there is currently heightened interest in new, all-inclusive approaches to the problem. According to Rudolph Penner, director of the Congressional Budget Office, "The prospects for radical tax reform are brighter than ever."! In his State of the Union message on January 25, 1984, President Reagan called for the Treasury Department to make a comprehensive study of ways to make the income tax more simple, more efficient, and more equitable. Treasury Secretary Donald T. Regan has indicated that the department will probably recommend some sort of modified flat tax system in its report. The administration is not alone in its interest in flat taxes; each major party has formulated a detailed and comprehensive modified flat tax proposal and has introduced it in Congress. This Economic Commentary examines the nature of flat taxes, the inadequacies in the present system that they would remedy, and the reasons why the alluring goal of a pure flat tax is difficult to achieve. In the process, the article illustrates the economic principles against which tax policy can be mea-Iuul Gary Wyckoff, an economist with the Federal Reserve Bank of Cleveland, studies the public sector. Michael Dvorak provided research assistance for this article.
Economic Commentary, 1985
SSRN Electronic Journal, 1984
provided research assistance for t h i s paper. I have benefited from comments made a t seminars ... more provided research assistance for t h i s paper. I have benefited from comments made a t seminars here a t the Bank and a t Case Western Reserve University. Responsi bil i t y for any remaining errors i s , of course, my own. Working papers of the Federal Reserve Bank of Cl eve1 and are prel imi nary materi a1 s, circulated t o stimulate d i scossion and critical comment. The views stated herein are the author's and not necessarily those of the Federal Reserve Bank of Cleveland or of the Board of Governors of the Federal Reserve System.
The Review of Economics and Statistics, 1991
Previous empirical studies of bureaucratic power have employed testing procedures that are sensit... more Previous empirical studies of bureaucratic power have employed testing procedures that are sensitive only to complete bureaucratic power in which the bureaucrat is able to force an all or nothing choice on his legislative sponsor. This paper suggests a test for incomplete bureaucratic power in which micro-based, survey estimates of the cost elasticity of demand and marginal propensity to spend out of lump-sum aid are compared with estimates of these same parameters taken from governmental expenditure studies. Empirical tests with 205 non-SMSA school districts in Michigan yield results that are consistent with incomplete bureaucratic power. Copyright 1991 by MIT Press.
Public Finance Quarterly, 1995
This article makes a simple but heretofore unappreciated point: In urban areas, voter movement wi... more This article makes a simple but heretofore unappreciated point: In urban areas, voter movement will cause equalizing intergovernmental aid (such as state education aid) to be capitalized into the value of housing. Because poor voters are likely to be renters, they will have to pay for better schools created by state aid through higher housing costs. To establish this point, the article describes a very simple model of an urban area with two communities and three income groups. In the case of an urban area in which the central city is not large relative to the metropolitan region, the welfare effect of intergovernmental aid on poor voters is completely offset by higher housing costs. Rather than increasing the total resources available to poor people, intergovernmental aid amounts to a Hicksian price adjustment that leaves the poor no better off than before. The article then discusses real-world complications to the model, including alternative decision-making mechanisms and preferen...
Public Choice, 1990
Using a utility-based graphical model of bureaucratic choice, this paper develops four empirical ... more Using a utility-based graphical model of bureaucratic choice, this paper develops four empirical predictions from the theory of slack-maximizing bureaucracy. These predictions are compared to those resulting from the Niskauen budget-maximizing model of bureaucracy. Slackmaximizing and budget-maximizing bureaucracies are similar in their response to changes in cost and in their generation of "flypaper effects", but they differ in their responses to matching and lump-sum grants.
Public Choice, 1990
This paper examines the bureaucrat's choice between devoting resources to economic rents (organiz... more This paper examines the bureaucrat's choice between devoting resources to economic rents (organizational slack) and maximizing the budget of the agency. A new model of bureaucracy is developed using utility rather than a demand function as its foundation. It is shown that increases in income alter the slack-budget constraint to favor organizational slack over budgetmaximization. Modern federal bureaucracies in the U.S. are predicted to be slack-maximizing and X-inefficient.
An examination of the economic rationale behind soil conservation programs, an assessment of the ... more An examination of the economic rationale behind soil conservation programs, an assessment of the magnitude of the soil erosion problem, and an evaluation of the effectiveness of U.S. soil conservation policies.
Journal of Urban Economics, 1988
Journal of Urban Economics, 1991
The flypaper effect is the common empirical result that lump-sum intergovernmental grants stimula... more The flypaper effect is the common empirical result that lump-sum intergovernmental grants stimulate more local government spending than increases in private income which are theoretically equivalent. In this paper, four of the best-known explanations of the fiypaper effect are tested, using data from Michigan school districts. None of these explanations are confirmed by the data. The cause of the flypaper effect is likely to be much more deeply rooted in the nature of local decision-making than is currently recognized.
Uploads
Papers by Paul (Gary) Wyckoff