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A Politico-economic Approach to Intergovernmental Lump-Sum Grants

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  • Pereira, Paulo T C

Abstract

This paper develops a positive approach to grant design when the central government and a lobby of local governments are the main agents. It develops the hypothesis that the regressivity or progressivity of per capita grants regarding community size is, ceteris paribas, related to the structure of the lobbying activities of local governments and is independent of hypothetical economies or diseconomies of scale in the production of local public goods. An encompassing lobby organisation using a 'one mayor one vote' system of representation supports the regressivity of per capita grants while under 'proportional' representation the lobby will support a design of per capita grants which is progressive towards community size. An empirical analysis of lump-sum grants in Portugal supports the politico-economic hypothesis and rejects the hypothesis that economies of scale is the main explanatory cause for the observed regressivity of per capita grants. Copyright 1996 by Kluwer Academic Publishers

Suggested Citation

  • Pereira, Paulo T C, 1996. "A Politico-economic Approach to Intergovernmental Lump-Sum Grants," Public Choice, Springer, vol. 88(1-2), pages 185-201, July.
    • Handle: RePEc:kap:pubcho:v:88:y:1996:i:1-2:p:185-201
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    Cited by:

    1. Rui Nuno Baleiras & José da Silva Costa, 2003. "To Be or Not To Be in Office Again: Political Business Cycles with Local Governments," Public Economics 0302009, University Library of Munich, Germany.
    2. Dalle Nogare, Chiara & Kauder, Björn, 2017. "Term limits for mayors and intergovernmental grants: Evidence from Italian cities," Regional Science and Urban Economics, Elsevier, vol. 64(C), pages 1-11.
    3. Dahlby, Bev & Rodden, Jonathan & Wilson, Sam, 2009. "A Median Voter Model of the Vertical Fiscal Gap," Working Papers 2009-14, University of Alberta, Department of Economics.
    4. Leonel Muinelo-Gallo & Adrián Rodríguez-Miranda & Pablo Castro-Scavone, 2016. "Intergovernmental Transfers and Regional Income Inequalities: An Empirical Analysis of Uruguay," Hacienda Pública Española / Review of Public Economics, IEF, vol. 219(4), pages 9-34, December.
    5. Rui Nuno Baleiras & Jose da Silva Costa, 2001. "To be or not to be in office again, that is the question: political business cycles with local governments," Nova SBE Working Paper Series wp402, Universidade Nova de Lisboa, Nova School of Business and Economics.
    6. Linda Veiga, 2012. "Determinants of the assignment of EU funds to Portuguese municipalities," Public Choice, Springer, vol. 153(1), pages 215-233, October.
    7. Maria El Khdari, 2019. "Déterminants des transferts intergouvernementaux : le cas du Maroc," Post-Print hal-02137651, HAL.
    8. Karolina Kaiser & Emmanuelle Taugourdeau, 2013. "The timing of elections in federations: a disciplining device against soft budget constraints?," Public Choice, Springer, vol. 154(3), pages 197-215, March.
    9. Emilie Caldeira, 2012. "Does the System of Allocation of Intergovernmental Transfers in Senegal Eliminate Politically Motivated Targeting?," Journal of African Economies, Centre for the Study of African Economies, vol. 21(2), pages 167-191, March.
    10. Banful, Afua Branoah, 2011. "Do formula-based intergovernmental transfer mechanisms eliminate politically motivated targeting? Evidence from Ghana," Journal of Development Economics, Elsevier, vol. 96(2), pages 380-390, November.
    11. Marcel Thum & Thomas Fester & Andreas Kappler & Helmut Seitz, 2005. "Öffentliche Infrastruktur und kommunale Finanzen : Gutachten im Auftrag des Bundesministeriums für Verkehr, Bau- und Wohnungswesen und des Bundesamtes für Bauwesen und Raumordnung," ifo Dresden Studien, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 37, July.
    12. Teferi Mergo & Alain-Desire Nimubona & Horatiu Rus, 2019. "Political Representation and the Provision of Public Goods: Theory and Evidence from Ethiopia," Working Papers 1901, University of Waterloo, Department of Economics, revised Jan 2019.
    13. Nelson Marconi & Paulo Arvate & João Moura Neto & Paulo Palombo, 2009. "Vertical transfers and the appropriation of resources by the bureaucracy: the case of Brazilian state governments," Public Choice, Springer, vol. 141(1), pages 65-85, October.
    14. Bev Dahlby & Jonathan Rodden, 2013. "A political economy model of the vertical fiscal gap and vertical fiscal imbalances in a federation," Working Papers 2013/18, Institut d'Economia de Barcelona (IEB).
    15. Baleiras, Rui Nuno & da Silva Costa, Jose, 2004. "To be or not to be in office again: an empirical test of a local political business cycle rationale," European Journal of Political Economy, Elsevier, vol. 20(3), pages 655-671, September.
    16. Bev Dahlby & Jonathan Rodden, 2013. "A political economy model of the vertical fiscal gap and vertical fiscal imbalances in a federation," Working Papers 2013/18, Institut d'Economia de Barcelona (IEB).
    17. Linda Gonçalves Veiga & Maria Manuel Pinho, 2005. "The Political Economy of Portuguese Intergovernmental Grants," NIPE Working Papers 8/2005, NIPE - Universidade do Minho.

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