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Should the Federal Government Reallocate Funds within Federal Transfers?

Author

Listed:
  • Tiago Neves Sequeira

    (Universidade da Beira Interior, sequeira@ubi.pt)

  • Alexandra Ferreira-Lopes

    (Lisbon University Institute)

Abstract

It is recognized that one of the goals of federal transfers is to provide the states with some financial leverage during recessions. Federal transfers in the United States comprise such components as retirement and disability payments for individuals, other direct payments for individuals or organizations, grants, procurement contracts, and salaries and wages. Is the composition of the federal transfers’ budget having an optimal effect on the business cycle or should the federal government reallocate some expenditure? In this article, we argue that the federal government may improve its role in stabilizing the business cycle if some reallocation is made from procurement contracts and payments for other than individuals to direct payments for individuals, grants, and disability and retirement payments.

Suggested Citation

  • Tiago Neves Sequeira & Alexandra Ferreira-Lopes, 2009. "Should the Federal Government Reallocate Funds within Federal Transfers?," Public Finance Review, , vol. 37(5), pages 596-612, September.
  • Handle: RePEc:sae:pubfin:v:37:y:2009:i:5:p:596-612
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    References listed on IDEAS

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    1. Douglas Holtz-Eakin & Amy Schwartz, 1995. "Spatial productivity spillovers from public infrastructure: Evidence from state highways," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 2(3), pages 459-468, October.
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    4. Paul Cashin & Ratna Sahay, 1996. "Internal Migration, Center-State Grants, and Economic Growth in the States of India," IMF Staff Papers, Palgrave Macmillan, vol. 43(1), pages 123-171, March.
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    6. Howard Chernick, 2010. "Redistribution at the State and Local Level: Consequences for Economic Growth," Public Finance Review, , vol. 38(4), pages 409-449, July.
    7. Gasper A. Garofalo & Steven Yamarik, 2002. "Regional Convergence: Evidence From A New State-By-State Capital Stock Series," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 316-323, May.
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    More about this item

    Keywords

    components of federal transfers; business cycles; panel data; GMM;

    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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