Journal
JOURNAL OF PUBLIC ECONOMICS
Volume 92, Issue 12, Pages 2320-2335Publisher
ELSEVIER SCIENCE SA
DOI: 10.1016/j.jpubeco.2007.05.004
Keywords
Fiscal federalism; Grants; Local taxation; Local government expenditure; Causal effects; Discontinuity analysis
Categories
Ask authors/readers for more resources
When investigating the effects of federal grants on the behavior of lower-level governments, it is hard to defend the handling of grants as an exogenous factor. Federal governments often set grants based on characteristics and performance of decentralized governments. In this paper we make use of a discontinuity in the Swedish grant system in order to estimate the causal effects of general intergovernmental grants on local spending and local tax rates. The formula for the distribution of funds is used as an exclusion restriction in an IV-estimation. We find evidence of crowding-in, where federal grants are shifted to more local spending, but not to reduced local tax rates. (C) 2007 Elsevier B.V. All rights reserved.
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available