The authors quantify the fungibility effect or diversion of resources towards purposes other than investment, by regions receiving conditional capital transfers. To identify this behaviour, they have taken different empirical approaches with frontier techniques that let them quantify whether the...

There is a broad theoretical consensus on the effects of transfers (desired incentive impacts and induced adverse effects). But, as the literature review shows, there is not an accepted methodology for the empirical evaluation of these effects. The authors suggest a simple but rigorous empirical...