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Structural Shifts in the Treatment of Intergovernmental Aid: The Case of Rural Roads

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  • Deller, Steven C.
  • Walzer, Norman

Abstract

The effects of structural shifts in the treatment of intergovernmental aid during the 1980s are tested using a sample of 1,929 rural counties with local road responsibilities. A dynamic model is used to test the hypothesis that local public officials treated intergovernmental aid differently after the Reagan/Bush policy of Fiscal Federalism was implemented. Empirical findings from the dynamic model are that Federal aid was much more stimulative at the end of the decade than in earlier years but the effects of state aid remained the same throughout the 1980s. These differences are attributed to a perception that Federal aid is less certain and more transitory than permanent.

Suggested Citation

  • Deller, Steven C. & Walzer, Norman, 1995. "Structural Shifts in the Treatment of Intergovernmental Aid: The Case of Rural Roads," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 27(2), pages 522-535, December.
    • Handle: RePEc:cup:jagaec:v:27:y:1995:i:02:p:522-535_02
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    References listed on IDEAS

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    1. Ladd, Helen F, 1990. "State Assistance to Local Governments: Changes during the 1980s," American Economic Review, American Economic Association, vol. 80(2), pages 171-175, May.
    2. Bahl, Roy W. & Sjoquist, David L., 1990. "The State and Local Fiscal Outlook: What Have We Learned and Where Are We Headed?," National Tax Journal, National Tax Association, vol. 43(3), pages 321-42, September.
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    4. Baumel, C. Phillip & Shornhorst, Eldo, 1983. "Local Rural Roads and Bridges: Current and Future Problems and Alternatives," Staff General Research Papers Archive 11669, Iowa State University, Department of Economics.
    5. Philip J. Grossman, 1990. "The Impact of Federal and State Grants on Local Government Spending: a Test of the Fiscal Illusion Hypothesis," Public Finance Review, , vol. 18(3), pages 313-327, July.
    6. O'Brien, J. Patrick & Shieh, Yeung-Nan, 1990. "Utility Functions and Fiscal Illusion From Grants," National Tax Journal, National Tax Association;National Tax Journal, vol. 43(2), pages 201-205, June.
    7. Bahl, Roy W. & Sjoquist, David L., 1990. "The State and Local Fiscal Outlook: What Have We Learned and Where Are We Headed?," National Tax Journal, National Tax Association;National Tax Journal, vol. 43(3), pages 321-342, September.
    8. O'Brien, J. Patrick & Shieh, Yeung-Nan, 1990. "Utility Functions and Fiscal Illusion from Grants," National Tax Journal, National Tax Association, vol. 43(2), pages 201-05, June.
    9. Deller, Steven C & Chicoine, David L & Walzer, Norman, 1988. "Economies of Size and Scope in Rural Low-Volume Roads," The Review of Economics and Statistics, MIT Press, vol. 70(3), pages 459-465, August.
    10. Grossman, Philip J., 1989. "Intergovernmental Grants and Grantor Government Own-Purpose Expenditures," National Tax Journal, National Tax Association;National Tax Journal, vol. 42(4), pages 487-494, December.
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    Cited by:

    1. Swenson, David & Deller, Steven C., 2001. "Devolution or Convolution? The Changing Relationship Between Federal, State and Local Governments," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 31(1), pages 1-27.
    2. Steven C. Deller & Craig S. Maher, 2006. "A Model of Asymmetries in the Flypaper Effect," Publius: The Journal of Federalism, CSF Associates Inc., vol. 36(2), pages 213-229.
    3. Juan González Alegre, 2012. "An evaluation of EU regional policy. Do structural actions crowd out public spending?," Public Choice, Springer, vol. 151(1), pages 1-21, April.
    4. Brown, Dennis M. & Flake, Oliver L., 1999. "Rural Transportation: An Annotated Bibliography," Miscellaneous Publications 323881, United States Department of Agriculture, Economic Research Service.
    5. Laura Sour, 2013. "The flypaper effect in Mexican local government," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 28(1), pages 165-186.
    6. Deller, Steven C. & Maher, Craig & Lledo, Victor, 2002. "Wisconsin Local Government, State Shared Revenues And The Illusive Flypaper Effect," Staff Papers 12599, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.

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