2022 Volume 52 Issue 2 Pages 347-366
The purpose of this study was to examine the degree of capitalization of local public goods and finances in urban and non-urban areas. Based on the model of Brueckner （1982）, the land price function was estimated using panel data.
In the metropolitan employment areas （MetEAs）, education and environmental hygiene sectors had negative impacts, and the welfare sector had a positive impact on land prices. However, community infrastructure and land conservation sectors were not significant. In the non-urban employment areas （NonEA）, only the education sector was significant and had a negative impact on land prices. These are reasonable results in light of recent social conditions and the results of previous studies.
Local government bonds are expected to have a negative impact on land prices from a theoretical model. In MetEA, the local government bonds were not significant, but they had a negative impact on land prices. By contrast, the local government bonds had a positive impact on land prices in NonEA. The functions of local government bonds may differ in the financial structure of municipalities in MetEA and NonEA.
These results indicate the degree of capitalization depends on and varies with regional characteristics. In particular, differences in the degree of capitalization of local government bonds require examination of theoretical mechanisms and accumulation of further empirical studies.
JEL Classifications:R32, R51, R53
