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Katsuyoshi Nakazawa, Tomohisa Miyashita and Akira Yokoyama
''The Effect of Urban Compaction on Financial Efficiency''
In Japan, there have been discussions about how to maintain sustainability in response to population decline, low birth rate, and aging. Under such circumstances, the development of a “compact city” that centrally concentrates the population, namely urban compaction, is expected to increase financial efficiency. This study explores the validity of claims that urban compaction increases the municipality's financial efficiency. This study employs“true fixed effect stochastic frontier cost function" to estimate the efficiency of local public expenditures and uses the technical inefficiency variable “population ratio of densely inhabited districts”—the index of urban compaction. Estimation results show that higher-density urban forms increase the financial efficiency of some kinds of expenditures.
Keywords: Compact city, Financial efficiency, Stochastic frontier analysis, Urban form
JEL: H7 - State and Local Government; Intergovernmental Relations: General
H4 - Publicly Provided Goods: General
Manuscript Received : Apr 05 2022 Manuscript Accepted : Apr 05 2022

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