Reply to comments on 'Urban diversity and fiscal decentralization.'

Article Abstract:

It is common practice in modelling to pick a numeraire and in the Dixit-Stiglitz model, it is not an 'unorthodox assumption' to select labor as the numeraire. One must pick a numeraire to prevent delaying the illumination of the problem at hand. If labor is chosen as the numeraire, then real wages must be the main focus. An equilibrium is solved where entrepreneurs eliminate labor supply to cities in making decisions, thus producing inefficiency in results.

Public Finance Activities, Fiscal Policy, Decentralized Organization, Decentralization in government, Government decentralization, Decentralization (Management)

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Are municipalities Tieboutian clubs?

Article Abstract:

The hypothesis that municipalities epitomize the concepts proposed by the Tieboutian club theory is empirically tested. Data from the 1990 Census for Los Angeles County are examined using various methods such as factor analysis, analysis of variance and cluster analysis. Empirical results confirm the Tieboutian nature of municipalities. However, spatial clustering may occur at a higher level of aggregation.

Economic aspects, Cities and towns, Los Angeles County, California, Instrumental variables (Statistics), Instrumental variables

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