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Grants structure when the type of public project is endogenous

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  • Hikaru Ogawa

Abstract

This paper gives an insight into changes in intergovernmental grants structure, focusing on the type of public project. Presenting a simple model which incorporates the endogenous determination of project type and grants structure, the results show that as the relative cost encountered by central government in collecting public funds increases, the central government tends to choose types of projects which local governments prefer and adopt block grant systems. The resulting equilibrium is compared with an optimal solution based on an utilitarian welfare function. Copyright Springer-Verlag Berlin Heidelberg 2002

Suggested Citation

  • Hikaru Ogawa, 2002. "Grants structure when the type of public project is endogenous," Economics of Governance, Springer, vol. 3(1), pages 59-69, March.
    • Handle: RePEc:spr:ecogov:v:3:y:2002:i:1:p:59-69
    DOI: 10.1007/s101010100041
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    Keywords

    Key words: Public Project; block versus matching grants; JEL Classification: H11; H77;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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