Data from 487 municipal governments with populations greater than 50,000 are examined to see the relationship between population density and per capita government expenditures. There is no statistically significant relationship between per capita total government expenditures and operational expenditures for cities smaller than 500,000, and for larger cities, higher population density is associated with higher per capita government expenditures. Infrastructure expenditures tend to decline with increases in population density for cities smaller than 500,000, whereas expenditures on services tend to increase with population density for cities larger than 500,000. The relationship between per capita total expenditures and population density has policy relevance because it indicates that when all government expenditures are taken into account, policies that increase population density will not reduce per capita government expenditures and, in larger cities, will lead to higher per capita government expenditures.

One argument in support of minimizing urban sprawl is that sprawl creates transportation externalities. A problem with empirically examining the relationship between sprawl and transportation externalities is that sprawl is a difficult concept to quantify. This paper uses a measure of sprawl designed by Ewing, Pendall, and Chen (2002) to examine the relationship between sprawl and commute times, automobile ownership, miles driven, fatal auto accidents, air pollution,and highway expenditures. An empirical investigation finds that there is no statistically significant relationship between sprawl and and of these transportation externalities.

Fiscal federalism, Local government, Tiebout model, Leviathan model, Institutions and prosperity,