Voters as a Hard Budget Constraint: On the Determination of Intergovernmental Grants
Recent empirical literature has shown that the determination of intergovernmental grants is highly influenced by the political bargaining power of the recipient states. In these models federal politicians are assumed to buy the support of state voters, state politicians and state interest groups by providing grants. In this paper we provide evidence that the fiscal referen-dum reduces the reliance of states on matching grants received from the central government and thus the possibility of state interest groups and state bureaucrats to obtain more grants. If referendums are available, voters serve as a hard budget constraint.
|Date of creation:||Jun 2005|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.crema-research.ch
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Lars P Feld & Gebhard Kirchgässner, 2001. "The political economy of direct legislation: direct democracy and local decision-making," Economic Policy, CEPR;CES;MSH, vol. 16(33), pages 329-367, October.
- Wyckoff, Paul Gary, 1991. "The elusive flypaper effect," Journal of Urban Economics, Elsevier, vol. 30(3), pages 310-328, November.
- Wallace E. Oates, 1999. "An Essay on Fiscal Federalism," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1120-1149, September.
- Bruno S. Frey & Alois Stutzer, .
"Happiness, Economy and Institutions,"
IEW - Working Papers
015, Institute for Empirical Research in Economics - University of Zurich.
- Bohnet, Iris & Frey, Bruno S, 1994. "Direct-Democratic Rules: The Role of Discussion," Kyklos, Wiley Blackwell, vol. 47(3), pages 341-54.
- Friedrich Schneider & Hans Pitlik & Harald Strotmann & G�nther Schmid, 2001. "On the politicization of intergovernmental fiscal relations in Germany after unification," Economics working papers 2001-05, Department of Economics, Johannes Kepler University Linz, Austria.
- Philip J. Grossman, 1987.
"A Political Theory of Inter-Governmental Grants,"
School of Economics Working Papers
1987-06, University of Adelaide, School of Economics.
- Feld, Lars P. & Matsusaka, John G., 2003. "Budget referendums and government spending: evidence from Swiss cantons," Journal of Public Economics, Elsevier, vol. 87(12), pages 2703-2724, December.
- Weingast, Barry R & Shepsle, Kenneth A & Johnsen, Christopher, 1981. "The Political Economy of Benefits and Costs: A Neoclassical Approach to Distributive Politics," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 642-64, August.
- Per Tovmo & Torberg Falch, 2002. "The flypaper effect and political strength," Economics of Governance, Springer, vol. 3(2), pages 153-170, 07.
- James R. Hines & Richard H. Thaler, 1995. "The Flypaper Effect," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 217-226, Fall.
- Winer, Stanley L, 1983. "Some Evidence on the Effect of the Separation of Spending and Taxing Decisions," Journal of Political Economy, University of Chicago Press, vol. 91(1), pages 126-40, February.
- Feld, Lars P. & Kirchgassner, Gebhard, 2000. "Direct democracy, political culture, and the outcome of economic policy: a report on the Swiss experience," European Journal of Political Economy, Elsevier, vol. 16(2), pages 287-306, June.
- P.J. Grossman, 1988.
"The Impact of Federal and State Grants on Local Government Spending: A test of the fiscal illusion hypothesis,"
Economics Discussion / Working Papers
88-07, The University of Western Australia, Department of Economics.
- 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.
- Philip J. Grossman, 1990. "The impact of federal and state grants on local government spending: A test of the fiscal illusion hypothesis," Monash Economics Working Papers archive-11, Monash University, Department of Economics.
- Matsusaka, John G, 1995. "Fiscal Effects of the Voter Initiative: Evidence from the Last 30 Years," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 587-623, June.
- Pommerehne, Werner W & Schneider, Friedrich, 1978. "Fiscal Illusion, Political Institutions, and Local Public Spending," Kyklos, Wiley Blackwell, vol. 31(3), pages 381-408.
- Heyndels, Bruno & Smolders, Carine, 1994. " Fiscal Illusion at the Local Level: Empirical Evidence for the Flemish Municipalities," Public Choice, Springer, vol. 80(3-4), pages 325-38, September.
- Becker, Gary S, 1983. "A Theory of Competition among Pressure Groups for Political Influence," The Quarterly Journal of Economics, MIT Press, vol. 98(3), pages 371-400, August.
- Holsey, Cheryl M., 1993. "Price and income distortions under separate spending and taxing decisions," Journal of Public Economics, Elsevier, vol. 50(1), pages 93-114, January.
When requesting a correction, please mention this item's handle: RePEc:cra:wpaper:2005-21. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anna-Lea Werlen)
If references are entirely missing, you can add them using this form.