A FISCAL FEDERALISM APPROACH TO INFRASTRUCTURE POLICY

This paper presents a fiscal federalism perspective on infrastructure policy. It begins by looking at the theory of fiscal federalism and th en turns to the actual division of the responsibility for providing pu blic capital in the United States. The paper then argues that it is di fficult to square theory and actual practice: a good case can be made that national infrastructure policy is inconsistent with the principle s of fiscal federalism in a number of important respects. The final se ctions of the paper look at two specific issues in federalism, the tax exempt municipal bond market and interjurisdictional competition. (C) 1997 Elsevier Science B.V.