Infrastructure and social welfare in metropolitan America

Public infrastructure investment may indirectly affect firm productivity and household welfare through its impact on the location of economic activity. Existing infrastructure policies encourage firms and households to move from dense urban environments to the surrounding suburbs. Nevertheless, several recent studies have suggested that the concentration of producers and consumers within cities results in "agglomeration economies" that are socially beneficial. In light of these findings, the author recommends the creation of infrastructure investment authorities that would have the power to select and finance projects that promote the overall well-being of a given region. Such authorities would most likely direct a larger share of infrastructure investment to the central cities.Industrial location ; Infrastructure (Economics) ; Investments ; Public welfare

Fiscal policy in New York and New Jersey: 1977-97

Between 1977 and 1997, real government spending in New York and New Jersey rose more than 40 percent, led by sharply higher outlays for public welfare and education. Increased tax revenues offset the spending hikes, allowing the states to run large cash surpluses in most years, but both states saw their long-term debt grow markedly. As a result, net financial wealth rose only marginally in New Jersey and declined slightly in New York over the twenty-year period.Fiscal policy ; Taxation - New Jersey ; Taxation - New York ; Public welfare

Exogenous shocks and the dynamics of city growth: evidence from New York

This article was presented at a conference organized by the Federal Reserve Bank of New York in April 2005, "Urban Dynamics in New York City." The goal of the conference was threefold: to examine the historical transformations of the engine-of-growth industries in New York and distill the main determinants of the city's historical dominance as well as the challenges to its continued success; to study the nature and evolution of immigration flows into New York; and to analyze recent trends in a range of socioeconomic outcomes, both for the general population and recent immigrants more specifically.Economic conditions - New York (N.Y.) ; Federal Reserve District, 2nd ; Urban economics ; Terrorism

On the Optimal Design of Disaster Insurance in a Federation

Recent experience with disasters and terrorist attacks in the US indicates that state and local governments rely on the federal sector for support after disasters occur. But these same governments are responsible for investing in infrastructure designed to reduce vulnerability to natural and man-made hazards. This division of responsibilities – state governments providing protection from disasters and federal government providing insurance against their occurrence – leads to the tension that is at the heart of our analysis. We explore these tensions building on the model of Persson and Tabellini (1996). We show that when the federal government is committed to full insurance against disasters, states will have incentives to underinvest in costly protective measures. We then show that when the central government cannot verify state investment choices, the optimal insurance system would be designed to reward states that succeed in avoiding disasters and punish those that do not, thereby giving states an incentive to increase investment in protective infrastructure. However, this raises the question of whether the central government can credibly commit to such a scheme, and we find in a simple political model that it cannot. In our political model, the central government will decrease transfers ex-post if a state provides protective infrastructure that increases its expected uncertain income, generating a soft-budget constraint for states. This provides an additional incentive for states to underinvest in protective infrastructure. We discuss these results in light of disaster policy in the US.

Has September 11 affected New York City's growth potential?

In addition to exacting a tremendous human toll, the September 11 attack on the World Trade Center caused billions of dollars in property damage and a temporary contraction in New York City's economy. This article explores the effect of these events on the longer run economic prospects for the city. For many years, growth in New York has taken the form of rising property prices, reflecting a steady transition from low- to high-paying jobs. During the 1990s, the city's expansion was built on several factors, including improving fiscal conditions, better public services, and shifting industrial and population structures that favored job and income growth. The study suggests that the effects of September 11 will not eliminate these advantages in the medium term; in fact, preliminary indications are that the city remains an attractive location for businesses as well as households. Nevertheless, New York City will face many challenges as it attempts to return to its pre-attack growth path.Economic conditions - New York (N.Y.) ; Federal Reserve District, 2nd ; War - Economic aspects ; Terrorism

On the Optimal Design of Disaster Insurance in a Federation

Recent experience with disasters and terrorist attacks in the US indicates that state and local governments rely on the federal sector for support after disasters occur. But these same governments are responsible for investing in infrastructure designed to reduce vulnerability to natural and man-made hazards. This division of responsibilities – state governments providing protection from disasters and federal government providing insurance against their occurrence – leads to the tension that is at the heart of our analysis. We explore these tensions building on the model of Persson and Tabellini (1996). We show that when the federal government is committed to full insurance against disasters, states will have incentives to underinvest in costly protective measures. We then show that when the central government cannot verify state investment choices, the optimal insurance system would be designed to reward states that succeed in avoiding disasters and punish those that do not, thereby giving states an incentive to increase investment in protective infrastructure. However, this raises the question of whether the central government can credibly commit to such a scheme, and we find in a simple political model that it cannot. In our political model, the central government will decrease transfers ex-post if a state provides protective infrastructure that increases its expected uncertain income, generating a soft-budget constraint for states. This provides an additional incentive for states to underinvest in protective infrastructure. We discuss these results in light of disaster policy in the US.

The price of land in the New York metropolitan area

The price of vacant land in an urban area is a fundamental indicator of an area's attractiveness. However, because the value of vacant land is hard to measure, indirect methods are typically used to gauge prices. A more direct approach to measuring land prices, using a unique data set, reveals that the price of unimproved land in the New York area is high, and rose sharply from 1999 to 2006. The rising trend suggests the underlying strength of the area's economy and the increasing value of the area's productivity and amenities.Land use ; Urban economics ; Federal Reserve District, 2nd ; Economic conditions ; Prices

Non-coherent LED Arrays as Ground Beacons for Small Satellite Optical Communications Systems

Free space optical communication systems typically require receiving telescopes on the ground to be a co-located, high power, unmodulated laser transmitter to serve as a beacon for locating the ground station. Unfortunately, these lasers may be costly and subject to regulations on optical power and frequency of use, which would not apply to a non-coherent light source. A directed LED optical beacon for use with free-space laser communication downlink systems is designed, constructed, and tested. The beacon, consisting of an array of 80 green LEDs, produced 15.9 Watts of optical power at a peak wavelength of 528 nanometres with a beamwidth of 8.12 degrees FWHM. The beacon was tested at the Wallace Astrophysical Observatory in Westford, Massachusetts. On-orbit imaging was accomplished by an on-orbit Cubesat in collaboration with the Aerospace Corporation using a camera with a silicon CMOS detector and a 7.9 mm optical aperture. The LED beacon is easily identified in a series of 5 images taken by the CubeSat, demonstrating the viability of the use of a non-coherent LED arrays as optical communication uplink beacons

The recession's impact on the state budgets of New York and New Jersey

In the wake of the most recent U.S. recession, both New York State and New Jersey have faced multibillion-dollar budget gaps. An analysis of the makeup of their budgets reveals that the states' heavy reliance on personal income taxes--particularly from high-wage earners in the finance sector--has exacerbated revenue shortfalls. To close their budget gaps, New York and New Jersey have had to make difficult choices about tax increases and service cuts. In the future, the states might take steps to avert such budget quandaries by establishing "rainy day" funds or restructuring taxes to make them less sensitive to the business cycle. Subseries: Second District HighlightsBudget ; State finance ; Federal Reserve District, 2nd ; Recessions ; Economic conditions ; Budget deficits

Revenue implications of New York City's tax system

A study of New York City's tax system finds that over the past three decades, the system has become less reliant on property and general sales taxes and more dependent on corporate and personal income taxes. This shift has made the city's tax revenues less stable than the revenues of the 1970s and more sensitive to cyclical swings.Taxation - New York (N.Y.) ; Revenue ; Federal Reserve District, 2nd ; Local government