Knowing the responsiveness of state spending to federal subsidies along different dimensions allows for the optimal design of joint federal-state programs. Welfare is an important case in point: states have the ability to choose both the extent of welfare eligibility and the intensity of...

The authors measure the time-series property of catastrophic medical costs facing the elderly using information on medical deductions from a panel of tax returns. During the period of analysis, 1968-73, taxpayers could deduct medical expenses above 3 percent of income. They correct for the...