Local Government Tax Policy: Measuring the Efficiency of New York City's Tax Mix, FYs 1984‐1998

Abstract
This article applies the Markowitz portfolio model to New York City's tax mix to determine whether it is ‘mix‐efficient,’ in the sense that the portfolio minimizes volatility for given levels of growth. The results indicate that New York City's tax‐revenue portfolio is very close to being mix‐efficient. The analysis also extends the Markowitz portfolio model to consider the impact on growth and volatility of adopting a tax‐equity constraint.

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