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What Determines the Allocation of National Government Grants to the States?

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  • John Joseph Wallis
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    Abstract

    During the New Deal the federal government initiated a policy of massive grants to states for support of social welfare and other programs. Since that time grants have come to be an integral part of the American fiscal system, and scholars have continued to debate whether the allocation of federal grants between the states is motivated primarily by political or social and economic objectives. This paper shows that, during the 1930s, both political and economic effects were important determinants of grant allocation, but that the Congressional factors considered by Anderson and Tollison are not important while the Presidential factors considered by Wright are. When the analysis is extended to the years 1932 to 1982, however, Congressional influences do seem important. On the other hand, the dominant influence on federal grant policy over the larger sample appears to be state government expenditures, while both political and economic influences play a smaller role.

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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Historical Working Papers with number 0090.

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    Date of creation: Jul 1996
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    Handle: RePEc:nbr:nberhi:0090

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    1. Wright, Gavin, 1974. "The Political Economy of New Deal Spending: An Econometric Analysis," The Review of Economics and Statistics, MIT Press, vol. 56(1), pages 30-38, February.
    2. Wallis, John Joseph, 1991. "The Political Economy of New Deal Fiscal Federalism," Economic Inquiry, Western Economic Association International, vol. 29(3), pages 510-24, July.
    3. Mel Bungey & Peter Kenyon & Philip J. Grossman, 1991. "Explaining intergovernmental grants: Australian evidence," Development Research Unit Working Paper Series archive-14, Monash University, Department of Economics.
    4. Wallis, John Joseph, 1987. "Employment, Politics, and Economic Recovery during the Great Depression," The Review of Economics and Statistics, MIT Press, vol. 69(3), pages 516-20, August.
    5. Reading, Don C., 1973. "New Deal Activity and the States, 1933 to 1939," The Journal of Economic History, Cambridge University Press, vol. 33(04), pages 792-810, December.
    6. Craig, Steven G & Inman, Robert P, 1982. "Federal Aid and Public Education: An Empirical Look at the New Fiscal Federalism," The Review of Economics and Statistics, MIT Press, vol. 64(4), pages 541-52, November.
    7. Alston, Lee J & Ferrie, Joseph P, 1993. "Paternalism in Agricultural Labor Contracts in the U.S. South: Implications for the Growth of the Welfare State," American Economic Review, American Economic Association, vol. 83(4), pages 852-76, September.
    8. Wallis, John Joseph, 1989. "Employment in the Great Depression: New data and hypotheses," Explorations in Economic History, Elsevier, vol. 26(1), pages 45-72, January.
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    Cited by:
    1. Valentino Larcinese & James M. Snyder (Jr.) & Cecilia Testa, 2006. "Testing models of distributive politics using exit polls to measure voter preferences and partisanship," LSE Research Online Documents on Economics 3605, London School of Economics and Political Science, LSE Library.
    2. Dahlberg, M. & Johansson, E., 1999. "On the Vote Purchasing Behavior of Incumbent Governments," Papers 1999:24, Uppsala - Working Paper Series.
    3. Liang, Che-Yuan, 2008. "Collective Lobbying in Politics: Theory and Empirical Evidence from Sweden," Working Paper Series 2008:2, Uppsala University, Department of Economics.
    4. Johansson, E., 1999. "Intergovernmental Grants As A Tactical Instrument: Some Empirical Evidence from Swedish Municipalities," Papers 1999:10, Uppsala - Working Paper Series.
    5. Strömberg, David, 2002. "Optimal Campaigning in Presidential Elections: The Probability of Being Florida," CEPR Discussion Papers 3372, C.E.P.R. Discussion Papers.
    6. Alejandro Esteller-More, 2003. "The Politics of Tax Administration: Evidence from Spain," Public Economics 0303004, EconWPA.
    7. Jameson Boex & Jorge Martinez-Vazquez, 2005. "The Determinants of the Incidence of Intergovernmental Grants: A Survey of the International Experience," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0509, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    8. Jameson Boex, 2003. "The incidence of local government allocations in Tanzania," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0311, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    9. Strömberg, David, 2002. "Optimal Campaigning in Presidential Elections: The Probability of Being Florida," Seminar Papers 706, Stockholm University, Institute for International Economic Studies.

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