The effects of change in grants-in-aid regime and cuts on grants on municipalities' expenditures in Finland
In this paper the role of grants-in-aid in the Finnish municipal sector will be studied. Bearing in mind that there are important dynamic interrelationships between the taxing, spending decisions and grants-in-aid policy, an econometric analysis of the municipalities' expenditures using panel data will be carried out. Firstly, a comparison of two grants-in-aid systems, one based on matching grants and the other on general grants will be made. Secondly, an analysis of the effects of cuts on the municipalities' grants will be done.
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