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The other side of the local government ledger—The association between revenue growth and population growth
Journal article   Open access   Peer reviewed

The other side of the local government ledger—The association between revenue growth and population growth

Joseph Drew, Masato Miyazaki and Michael A Kortt
Australian Journal of Public Administration , Vol.82(4), pp.424-439
12/2023
DOI: https://doi.org/10.1111/1467-8500.12583
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Published (Version of record)CC BY-NC-ND V4.0,  Open Access
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Abstract

population growth local government financial sustainability local government revenue local government unit revenue local government municipal government revenue growth
Population growth exerts an impact on both sides of the local government accounting ledger—expenditure and revenue. Despite this fact, the vast scholarly literature on local government finance has been myopically focussed on expenditure functions. This apparent neglect to also consider the revenue side of the ledger is problematic because many regulators across the globe have exhorted local governments to pursue growth according to the assumption that it will promote fiscal health. In this article, we first set out a number of propositions that combine to cast some doubt on the common wisdom dispensed by local government policy-makers. Following this, we empirically explore the effects of population growth on revenue by making recourse to a comprehensive 10-year panel of revenue and population data. We conclude our work with some important public policy recommendations arising from the need to mitigate the prima facie surprising results that we obtain.

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