A Simple Theoretical Model of the Fungibility Hypothesis

Yasuhiro Tsukahara

Public Finance = Finances publiques, 1988, vol. 43, issue 3, 440-44

Abstract: The purpose of this paper is to develop a theoretical rationale for the fungibility hypothesis where local authorities can convert some fraction of conditional grants into fungible resources. In this paper, conditions for optimal allocation of a conditional grant for local authorities, as well as for the fungibility hypothesis to hold good, are derived. The model presented here is a straightforward application of models of the economies of crime.

Date: 1988
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Persistent link: https://EconPapers.repec.org/RePEc:pfi:pubfin:v:43:y:1988:i:3:p:440-44

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