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Should the Federal Government Reallocate Funds within Federal Transfers?

  • Tiago Neves Sequeira

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

  • Alexandra Ferreira-Lopes

    (Lisbon University Institute)

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.

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Article provided by in its journal Public Finance Review.

Volume (Year): 37 (2009)
Issue (Month): 5 (September)
Pages: 596-612

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Handle: RePEc:sae:pubfin:v:37:y:2009:i:5:p:596-612
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  1. Paul Cashin & Ratna Sahay, 1995. "Internal Migration, Center-State Grants and Economic Growth in the States of India," IMF Working Papers 95/66, International Monetary Fund.
  2. 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.
  3. Bowsher, Clive G., 2002. "On testing overidentifying restrictions in dynamic panel data models," Economics Letters, Elsevier, vol. 77(2), pages 211-220, October.
  4. Asdrubali, Pierfederico & Sorensen, Bent E & Yosha, Oved, 1996. "Channels of Interstate Risk Sharing: United States 1963-1990," The Quarterly Journal of Economics, MIT Press, vol. 111(4), pages 1081-1110, November.
  5. Howard Chernick, 2010. "Redistribution at the State and Local Level: Consequences for Economic Growth," Public Finance Review, , vol. 38(4), pages 409-449, July.
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