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The flypaper effect and political strength

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  • Per Tovmo
  • Torberg Falch

Abstract

Simple models of local government behavior predict equal effects of private income and unconditional federal grants on local government expenditures. Numerous empirical analyses, however, find that the effect of grants is larger than the income effect. We argue that this flypaper effect may be a result of weak political leaderships in multi–issue and multi–party decision–making environments. In multi–issue institutions, a strong political leadership may reduce inefficiency due to interest group influence and inter–party bargaining in the local council. Utilizing data for Norwegian local governments in the 1930s, we find that political strength reduces the size of the flypaper effect. When the local council consists of only one political party, we cannot reject absence of a flypaper effect, while the flypaper effect is large in fragmented local councils. Copyright Springer-Verlag Berlin Heidelberg 2002

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Bibliographic Info

Article provided by Springer in its journal Economics of Governance.

Volume (Year): 3 (2002)
Issue (Month): 2 (07)
Pages: 153-170

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Handle: RePEc:spr:ecogov:v:3:y:2002:i:2:p:153-170

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Related research

Keywords: Key words: flypaper effect; local public finance; political strength; JEL classification: D72; H72;

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Cited by:
  1. Lars Feld & Christoph Schaltegger, 2005. "Voters AS A Hard Budget Constraint: On the Determination of Intergovernmental Grants," Public Choice, Springer, vol. 123(1), pages 147-169, April.
  2. Elena Gennari & Giovanna Messina, 2014. "How sticky are local expenditures in Italy? Assessing the relevance of the flypaper effect through municipal data," International Tax and Public Finance, Springer, vol. 21(2), pages 324-344, April.
  3. Geys, Benny, 2006. "Government weakness and electoral cycles in local public debt: evidence from Flemish municipalities," Discussion Papers, Research Unit: Market Processes and Governance SP II 2006-06, Social Science Research Center Berlin (WZB).
  4. John Ashworth & Bruno Heyndels, 2005. "Government Fragmentation And Budgetary Policy In "Good" And "Bad" Times In Flemish Municipalities," Economics and Politics, Wiley Blackwell, vol. 17, pages 245-263, 07.
  5. Torberg Falch & Bjarne Strøm, 2005. "Wage Bargaining and Political Strength in the Public Sector," CESifo Working Paper Series 1629, CESifo Group Munich.
  6. Elena Gennari & Giovanna Messina, 2012. "How sticky are local expenditures in Italy? Assessing the relevance of the “flypaper effect” through municipal data," Temi di discussione (Economic working papers) 844, Bank of Italy, Economic Research and International Relations Area.
  7. Ma. Guillamón & Francisco Bastida & Bernardino Benito, 2013. "The electoral budget cycle on municipal police expenditure," European Journal of Law and Economics, Springer, vol. 36(3), pages 447-469, December.

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