Arnold Cote, K. Nicole and Smith, Wm. Doyle and Fullerton, Thomas M., Jr. (2010): Municipal Non-Residential Real Property Valuation Forecast Accuracy. Published in: International Journal of Business & Economics Perspectives , Vol. 6, No. 1 (22. March 2011): pp. 56-77.
Download (188Kb) | Preview
The objective of this study is to estimate the accuracy and/or reliability of alternative methods of forecasting property valuations of non-residential real commercial and industrial property in El Paso to improve municipal revenue forecasting. This study seeks to identify and evaluate four econometric and statistical alternatives to present forecasting practices for nonresidential property valuation forecasts: (1) a traditional income elasticity method, (2) a regional structural econometric model, (3) a statistical ARIMA method, and (4) trend analysis. In order to evaluate the four models, ex ante forecast simulations are created for each modeling approach and then compared to random walk and random walk with drift models for both commercial and industrial property values. Results indicate that the random walk with drift model outperformed all four models for both commercial and industrial property values. In addition, results also indicate that the random walk model outperformed all four models for industrial property values.
|Item Type:||MPRA Paper|
|Original Title:||Municipal Non-Residential Real Property Valuation Forecast Accuracy|
|Keywords:||Non-residential property valuation forecasts; regional economics; applied econometrics|
|Subjects:||C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C53 - Forecasting and Prediction Methods; Simulation Methods
H - Public Economics > H7 - State and Local Government; Intergovernmental Relations > H71 - State and Local Taxation, Subsidies, and Revenue
|Depositing User:||Thomas Fullerton|
|Date Deposited:||08. Jul 2011 23:40|
|Last Modified:||12. Feb 2013 12:37|
Bahl, R., & Schroeder, L. (1984). The Role of Multi-year Forecasting in the Annual Budgeting Process for Local Governments. Public Budgeting & Finance, 4 (3): 3-13.
Bretschneider, S., Bunch, B., & Wiplen G. (1992). Revenue Forecast Errors in Pennsylvania Local Government Budgeting: Source & Remedies, Public Budgeting & Financial Management, 4, 721-723.
Box, G.E. P., & Jenkins,G.M. (1976). Time Series Analysis, Control and Forecasting, Second Edition, San Francisco, CA: Holden Day.
City of El Paso Office of Management and Budget. (2007). City of El Paso FY2008 Budget Book.
Cirincione, C., Guerrieri, G.A., & Van de Sande, B. (1999). Municipal Government Revenue Forecasting: Issues of Method and Data. Public Budgeting & Finance, 19 (1): 26-46.
Dhane, G., & Barten, A.P. (1989). Where It All Began: The 1936 Tinbergen Model Revisited. Economic Modeling, 6, 203-19.
El Paso County Reports. (1982-2003). Texas Comptroller of Public Accounts: Property Tax Division.
Fair, R.C., & Shiller, R.J. (1990). Comparing Information in Forecasts from Econometric Models. American Economic Review, 80, 375-389.
Forrester, J. P. (1991). Budgetary Constraints and Municipal Revenue Forecasting. Policy Sciences, 24, 333-356.
Forrester, J.P. (1991). Multi-Year Forecasting and Municipal Budgeting. Public Budgeting & Finance, 11 (2): 47-61.
Frank, H. A. (1990). Municipal Revenue Forecasting with Time Series Models: A Florida Case Study. American Review of Public Administration, 20 (1): 45-59.
Frank, H. A., & McCollough, J. (1992). Municipal Forecasting Practice – Demand and Supply Side Perspectives. International Journal of Public Administration, 9, 1662-1695.
Fullerton, T. M., Jr., (1989). A Composite Approach to Forecasting State Government Revenues: Case Study of the Idaho Sales Tax. International Journal of Forecasting, 5, 373-380.
Fullerton, T. M., Jr. (2001). Specification of a Borderplex Econometric Forecasting Model. International Regional Science Review, 24, 245-260.
Fullerton, T. M., Jr. (2002). Empirical Evidence Regarding El Paso Property Tax Abatements: 1988-2001. Journal of Law and Border Studies, 2, 37-48.
Fullerton, T. M., Jr. (2004). Borderplex Bridge and Air Econometric Forecast Accuracy. Journal of Transportation & Statistics, 7, 7-21.
Fullerton, T. M., Jr., & Aragonés-Zamudio, V.A. (2006). El Paso Property Tax Abatement Ineffectiveness. International Journal of Business & Public Administration, 3, 79-94.
Fullerton, T. M., Jr., & Barraza De Anda, M.P. (2008). Borderplex Population Modeling. Migraciones Internacionales, 4 (Number 3), 91-104.
Fullerton, T. M., Jr., & Elias, A. (2004). Short-Term Water Consumption Dynamics in El Paso, Texas. Water Resources Research, 40, W08201, 1-1.7.
Fullerton, T. M., Jr., & Kelley, B.W. (2006). Metropolitan Retail Predictive Accuracy in El Paso. Forecasting Letters, 1 (2): 24-30.
Fullerton, T. M., Jr., & Kelley, B.W. (2008). El Paso Housing Sector Econometric Forecast Accuracy. Journal of Agricultural & Applied Economics, 40, 385-402.
Fullerton, T. M., Jr., &. Molina, A. L. (2007). Borderplex Economic Outlook: 2007-2009. Business Report SR07-2, El Paso, TX: University of Texas at El Paso Border Region Modeling Project.
Fullerton, T. M., Jr., &. Molina, A. L. (2010). Municipal Water Consumption Forecast Accuracy. Water Resources Research, 46 (June), W06515.1-5.8.
Fullerton, T. M., Jr., & Novela, G. (2010). Metropolitan Maquiladora Econometric Forecast Accuracy. Romanian Journal of Economic Forecasting, 13 (3): 124-140.
Granger, C. W. J., & Newbold, P. (1973). Some Comments of the Evaluation of Economic Forecasts,” Applied Economics, 5, 35-47.
Kennedy, P. (2003). A Guide to Econometrics. Fifth Edition, The MIT Press.
Leamer, E.E. (1983). Let’s Take the Con Out of Econometrics. American Economic Review, 73, 31-43.
McCloskey, D., & Ziliak, S. (1996). The Standard Error of Regression. Journal of Economic Literature, 34, 97-114.
Murdock, S. H., & White S. (1998). The Importance of Demographic Analyses in State- and Local-level Policy Evaluations: A Case Study Analysis of Property Taxes in Texas. Population Research and Policy Review, 17, 167-196.
Pindyck, R. S., & Rubinfeld, D.L. (1998). Econometric Models and Econometric Forecasts. Fourth Edition, Irwin McGraw-Hill.
Property Tax Code (2005). Texas Comptroller of Public Accounts. Austin: August.
Reddick, C. G. (2004). An Empirical Examination of Revenue Forecasting Techniques in Local Governments.” Municipal Finance Journal, 24 (4): 25-48.
Schroeder, L. (1982). Local Government Multi-Year Budgetary Forecasting: Some Administrative and Political Issues. Public Administration Review, March/April, 121-127.
Sexton, T. E. (1987). Forecasting Property Taxes: A Comparison and Evaluation of Methods. National Tax Journal, 40, 47-59.
Sexton, T. E., & Sexton, R.J. (1986). Re-evaluating the Income Elasticity of the Property Tax Base. Land Economics, 62, 182-191.
Theil, H. (1975). Economic Forecasts and Policy. Amsterdam: North – Holland, 31-42.
Theil, H. (1966). Applied Economic Forecasting. Amsterdam: North-Holland, 26-77.
Webb, R. H. (1984). Vector autoregressions as a tool for forecast evaluation. Federal Reserve Bank of Richmond Economic Review, 70, 3-11.
Wong, J. D. (1995). Options, Challenges, and Incentives for Implementing Systematic Revenue Forecasting in Local Government. Municipal Finance Journal, 16 (1): 63-69.