According to the flypaper effect hypothesis, higher levels of intergovernmental grants to local governments lead to higher levels of expenditures at the local level (Oates 1999; Deller and Maher 2005; Heyndels 2001; Turnbull 1998; Stine 1994; Bailey and Connolly 1998; Hines and Thaler 1995). The picture is a bit...

While the literature on how intergovernmental grants affect the budget of receiving jurisdictions is numerous, the very few studies that explicitly deal with likely endogeneity problems focus on grants targeted towards specific sectors or to specific type of recipients. The results from these...

The debate regarding the effect of fiscal policy on the level of output is long and has not been settled yet. This paper suggests a new identification strategy as a mean to resolve the debate. I show that the distribution of federal grants is affected by whether state representatives in Congress...

We test the hypothesis that the flypaper effect can arise if the recipient government finances part of its expenditures with a distortionary tax. We present a simple theoretical framework that shows how a lump-sum transfer stimulates the marginal expenditures of a recipient government through an...

The federal government has a large and growing presence in state and local policy activities. This rising intervention has been facilitated by “grants-in-aid,” which are programs that combine federal subsidies with topdown regulations to micromanage state and local affairs. A new analysis...

On April 5, 2012, President Barack Obama signed into law a new federal securities law exemption for crowdfunded securities offerings. Crowdfunding — the use of the Internet to raise small amounts of money from a large number of contributors — has become incredibly popular outside the...

This paper examines the behavioral influence of federal grants on nonprofit firms. The topic is of particular concern governments who wish to stimulate the private provision of public services. Recent research shows that grants may inadvertently reduce private sector provision, by causing a...

This paper studies the effects of delegating control of sovereign debt issuance to an independent authority in a monetary union where public spending decisions are decentralized. The model assumes that no policy makers are capable of commitment to a rule. However, consistent with Rogoff (1985)...

Social inequalities are a significant challenge in developing countries. Therefore, they should be treated as a leading priority in boosting socio-economic development. Such inequalities are a growing challenge for Poland. It is believed that social inequalities are behind Poland's relatively...