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Is the treatment of intergovernmental aid symmetric?

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  • Steven Deller
  • Craig Maher

Abstract

In this note we use a variable parameter model to test for asymmetries in the treatment of intergovernmental aid. The central question is whether local government officials treat intergovernmental aid differently during periods of aid certainty and uncertainty. We find evidence of fiscal replacement for 94% of Wisconsin municipalities and fiscal inducement for only a small handful of municipalities. The lower the dependency on shared revenues, the higher the odds that the municipality will replace lost shared revenues with own source revenues.

Suggested Citation

  • Steven Deller & Craig Maher, 2009. "Is the treatment of intergovernmental aid symmetric?," Applied Economics Letters, Taylor & Francis Journals, vol. 16(4), pages 331-335.
    • Handle: RePEc:taf:apeclt:v:16:y:2009:i:4:p:331-335
    DOI: 10.1080/13504850601018668
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    Cited by:

    1. Luigi Marattin & Tommaso Nannicini & Francesco Porcelli, 2022. "Revenue vs expenditure based fiscal consolidation: the pass-through from federal cuts to local taxes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(4), pages 834-872, August.
    2. Phuong Nguyen-Hoang & Yilin Hou, 2014. "Local Fiscal Responses to Procyclical Changes in State Aid," Publius: The Journal of Federalism, CSF Associates Inc., vol. 44(4), pages 587-608.

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