BRADDOCK, David
The use of regional economic models in conducting net present value analysis of development programs - New York : Marcel Dekker, 1995
Economic impact analysis may be combined with state tax models to produce cash flows of benefits and costs. Benefits from added employment accrue to the state from tax receipts and business payments into state unemployment compensation programs. Costs accrue from programmatic expenditures. Economic development program decisions may be made on the basis of net present value calculations. Thus, Government is analyzed as though it were a private company. The argument is made here that benefits should be l discounted at the marginal cost of capital because the alternative to taxation is use of tax funds by citizens at their marginal cost. Government programmatic costs should be discounted at the average cost of capital because public funds are deposited in financial institutions before expenditure. Interest payments are deposited by financial institutions to public accounts. The interest rate represents an estimate of the average cost of capital and is considered here as an alternative use of state funds; the public opportunity cost.
The use of regional economic models in conducting net present value analysis of development programs - New York : Marcel Dekker, 1995
Economic impact analysis may be combined with state tax models to produce cash flows of benefits and costs. Benefits from added employment accrue to the state from tax receipts and business payments into state unemployment compensation programs. Costs accrue from programmatic expenditures. Economic development program decisions may be made on the basis of net present value calculations. Thus, Government is analyzed as though it were a private company. The argument is made here that benefits should be l discounted at the marginal cost of capital because the alternative to taxation is use of tax funds by citizens at their marginal cost. Government programmatic costs should be discounted at the average cost of capital because public funds are deposited in financial institutions before expenditure. Interest payments are deposited by financial institutions to public accounts. The interest rate represents an estimate of the average cost of capital and is considered here as an alternative use of state funds; the public opportunity cost.
