The Role of Grants-in-Aid in a Federalist System of Governments
Abstract
Chapter 28 begins with the theory of grants-in-aid, presenting the standard efficiency argument to correct for spillovers of externalities across jurisdictions resulting from imperfect correspondences and then LeGrand’s prescription for fiscal equalization, an equity argument. The remainder of the chapter is empirical, focusing on issues related to the estimation of the demand for state and local services and grants-in-aid. Topics covered include the median voter model, Tiebout bias, the flypaper effect and various explanations for it, and Chernick’s analysis of the response to project grants.
Keywords
EU cohesion grants; Flypaper effect; Grants-in-aid exogenous grants; ...Get Public Finance, 3rd Edition now with the O’Reilly learning platform.
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