This paper uses a simple model of fiscal competition between local jurisdictions to analyse the impact of intergovernmental grants on the composition of public spending. We find that a higher degree of redistribution within a system of ʺfiscal equalisationʺ coincides with a smaller overall...

The aim of this paper is to check whether intergovernmental transfers for water projects accepted in 1986 can be rationalized by a simple efficiency criterion. The empirical findings support this conjecture only partially.