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The "Flypaper Effect" Is Not an Anomaly

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Author Info
Roemer, John E
Silvestre, Joaquim

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Abstract

The empirical nonequivalence between grants by a central government and increases in community income (the "flypaper effect") has been considered anomalous. But the "anomaly" label is na*ve: in a multiconsumer community, equivalence demands an unlikely match of tax rules and income-growth patterns. We go beyond the single-policy-variable, median-voter model and apply Roemer's concept of Party Unanimity Nash Equilibrium, which allows for party competition in multidimensional policy spaces. We compute the equilibria for a model with two independent policy variables (intercept and slope of an affine tax schedule) and obtain numerical values that agree with the empirical literature. Copyright 2002 by Blackwell Publishing Inc.

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Publisher Info
Article provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.

Volume (Year): 4 (2002)
Issue (Month): 1 ()
Pages: 1-17
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Handle: RePEc:bla:jpbect:v:4:y:2002:i:1:p:1-17

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=1097-3923

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Roemer, John E., 1998. "Why the poor do not expropriate the rich: an old argument in new garb," Journal of Public Economics, Elsevier, vol. 70(3), pages 399-424, December. [Downloadable!] (restricted)
  2. Hamilton, Jonathan H., 1986. "The flypaper effect and the deadweight loss from taxation," Journal of Urban Economics, Elsevier, vol. 19(2), pages 148-155, March. [Downloadable!] (restricted)
  3. John E. Roemer, . "The Democratic Political Economy Of Progressive Income Taxation," Department of Economics 97-11, California Davis - Department of Economics. [Downloadable!]
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  4. Hines, James R, Jr & Thaler, Richard H, 1995. "The Flypaper Effect," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 217-26, Fall. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Fernando Aragon, 2009. "The Flypaper Effect Revisited," STICERD - Economic Organisation and Public Policy Discussion Papers Series 004, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE. [Downloadable!]
  2. Gabriella Deborah Legrenzi, 2009. "Asymmetric and Non-Linear Adjustments in Local Fiscal Policy," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  3. van de Walle, Dominique & Ren Mu, 2007. "Fungibility and the flypaper effect of project aid : micro-evidence for Vietnam," Policy Research Working Paper Series 4133, The World Bank. [Downloadable!]
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  4. Chen, Shaohua & Mu, Ren & Ravallion, Martin, 2008. "Are there lasting impacts of aid to poor areas ? Evidence from rural China," Policy Research Working Paper Series 4084, The World Bank. [Downloadable!]
  5. Naoki Yoshihara, 2008. "On the General Existence of Pure Strategy Political Competition Equilibrium in Multi-dimensional Party-Faction Models," Discussion Paper Series a511, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
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This page was last updated on 2009-11-22.


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