Optimal investment strategy for boomtowns: a theoretical analysis

Journal Article · Thu Jun 01 04:00:00 EDT 1978 · Am. Econ. Rev.; (United States)

OSTI ID:6713301

Cummings, R G ^[1]; Schulze, W D

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1. Univ. of New Mexico, Albuquerque

An investment model is suggested as an improvement over intuition in setting government policies aimed at providing an optimal social infrastructure for boom towns. Using the decision environment and economic characteristics of a Rocky Mountain state boom town, the model shows that low interest rates and early front-end investment produce the greatest stability, while delayed investment contributes to instability. Policy implications derive from the fact that ad valorem property taxes for investment are generally collectible only after construction is completed. Of equal importance to the timing and amount of investment funds is the source of repayment funds. These could be broadened to include wage or use taxes during the construction period.

• OSTI ID: 6713301
• Journal Information: Am. Econ. Rev.; (United States), Journal Name: Am. Econ. Rev.; (United States) Vol. 68:3; ISSN AERNA
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290100 -- Energy Planning & Policy-- Energy Analysis & Modeling
290200* -- Energy Planning & Policy-- Economics & Sociology
530100 -- Environmental-Social Aspects of Energy Technologies-- Social & Economic Studies-- (-1989)
ACCOUNTING
BOOM TOWNS
CAPITAL
COMMUNITIES
CONSTRUCTION
ECONOMIC ANALYSIS
ECONOMIC IMPACT
ECONOMIC POLICY
ECONOMICS
ENERGY SOURCE DEVELOPMENT
INCOME
INTEREST RATE
INVESTMENT
MANAGEMENT
NORTH AMERICA
OPTIMIZATION
ROCKY MOUNTAIN REGION
SOCIAL IMPACT
SOCIO-ECONOMIC FACTORS
TAXES
USA