 The Flypaper Effect: Do Political Institutions Affect Danish Local Governments’ Response to Intergovernmental Grants?Marie Kjaergaard Local Government Studies, 2015, vol. 41, issue 4, 534-552 Abstract: Despite a large number of empirical studies on the flypaper effect, it remains disputed whether the effect exists and to what extent it is asymmetrical. The flypaper effect suggests that intergovernmental grants tend to result in higher increases in public expenditures than a similar increase in citizens’ private income would have led to. An asymmetrical effect exists when the fiscal response differs depending on whether grants are increased or decreased. By considering political institutions that moderate the effect of intergovernmental grants, this article offers a theoretical explanation that accounts for the mixed empirical evidence. The local response to intergovernmental grants is tested using a reform of the Danish intergovernmental grant scheme in 2007. In line with the expectation, the article finds a strong asymmetrical effect, but more surprisingly, this effect is found both when subnational budget institutions are centralised and when they are fragmented. Date: 2015 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:flgsxx:v:41:y:2015:i:4:p:534-552 Ordering information: This journal article can be ordered from DOI: 10.1080/03003930.2014.968708 Access Statistics for this article Local Government Studies is currently edited by Helen Hancock More articles in Local Government Studies from Taylor & Francis Journals |
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