ABSTRACT
Different cities affected by the same economic force experienced a different effect—at least in terms of degree—in correspondence to their jurisdiction’s system for financing local governments. To the extent a local government relies on, or can shift to, countercyclical or noncyclical fiscal tools, the better it can weather a recession. Many local governments have proved rather agile in accommodating difficulties through financial innovation. The 2008 crisis had special effects on local governments—different in quantity, and often quality, from those effects experienced by other, national-level, and governments. For many local governments worldwide, whose own fiscal powers are tightly constrained the most important one. In the US, the dramatic, and unfortunate, effects of the downturn on cities and other local governments have been painfully pronounced. The chapter describes four such tools meriting attention: issuance of debt, the sale of municipal assets, investment in sophisticated financial vehicles, and public–private partnerships particularly in the form of development impact fees.
