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Fiscal Illusion and the Grantor Government in Canada

David Hammes and Douglas T Wills

Economic Inquiry, 1987, vol. 25, issue 4, 707-13

Abstract: Recent work on the United States concludes that one or more illusions are responsible for the empirically observ ed "flypaper effect." Using annual Canadian data for the period 1962-84, the authors test the "single-illusion" and "dual-illusion" specifications currently in the literature. While the empirical res ults support the dual-illusion specification, it is not the unambiguo us choice over single-illusion specifications as previously found. Fu rther, the nature of the grant system in Canada raises questions abou t whether illusions or real factors produce the empirical results. Copyright 1987 by Oxford University Press.

Date: 1987
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Handle: RePEc:oup:ecinqu:v:25:y:1987:i:4:p:707-13