The Impact of Federal and State Grants on Local Government Spending: a Test of the Fiscal Illusion Hypothesis
This article offers an empirical test of the fiscal illusion hypothesis. It is argued that, if fiscal illusion increases with the degree of separation in taxing and spending powers, then federal unconditional grants ought to have a greater stimulatory impact on local government spending than state unconditional grants. Data for the 136 counties and cities of Virginia were examined and evidence in support of this hypothesis is provided. Federal grants were found to be the primary source of the stimulatory impact of grants. At the minimum, federal unconditional grants have twice the stimulatory effect as state unconditional grants.
Year of publication: |
1990
|
---|---|
Authors: | Grossman, Philip J. |
Published in: |
Public Finance Review. - Vol. 18.1990, 3, p. 313-327
|
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
Subsidizing Quantity Donations: Matches, Rebates, and Discounts Compared
Diederich, Johannes, (2019)
-
Subsidizing unit donations: matches, rebates, and discounts compared
Diederich, Johannes, (2021)
-
Federalism and the growth of government revisited
Grossman, Philip Johnson, (1991)
- More ...