What can be (and what has been) learned from general equilibrium simulation models of school finance?
This paper synthesizes some initial lessons from an emerging school finance literature that employs computational structural models to investigate different policy proposals. The advantage of such models lies in their ability to fully trace out the general equilibrium effects of policies within an internally consistent and empirically relevant economic framework. Results in this literature suggest that a full general equilibrium analysis may lead to outcomes that differ substantially from those predicted by partial equilibrium models. At the same time, there is considerable room for further research that can both inform and be informed by more standard empirical research.
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Professor of Economics
Professor Nechyba conducts his research within the fields of public finance, fiscal federalism, and the economics of education. His studies tend toward the investigation of function within local governments, public policy issues concerning disadvantaged families, and the economics behind primary and secondary education. He received funding for one of his latest projects, “An Empirical Investigation of Peer Effects in Schools and of Household Responses to School Policy Changes,” from a National