A fiscal impact model for Virginia localities

Abstract

This study develops dynamic, integrated fiscal impact models for Virginia counties and cities. It develops a theoretical base using analysis of the supply and demand for public goods and review of the literature of impact modeling. The empirical models are based on a static cross sectional econometric analysis of all Virginia counties and independent cities. The simulation models allow the comparison of impact and baseline scenarios developed using a broad range of economic, fiscal, and demographic variables. Validation of baseline scenarios for the simulation models are based on a sample of 12 counties and 12 cities. The ability of the models to perform well in a baseline case is analyzed using Theil' s coefficients and various other measures of Mean Square Error.