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The Flypaper Effect Revisited

Fernando Aragon ()

STICERD - Economic Organisation and Public Policy Discussion Papers Series from Suntory and Toyota International Centres for Economics and Related Disciplines, LSE

Abstract: This paper argues that there is nothing anomalous about the flypaper effect. Idevelop a simple median voter model of government spending with costly taxcollection that predicts the flypaper effect and provide a quantifiable measure of itsmagnitude. Using the model insights and previous estimates, I show that a tax ratebetween 8% to 16% would account for the flypaper effect observed in U.S. subnationalgovernments.

Keywords: flypaper effect; intergovernmental transfers; public finance; fiscaldecentralization (search for similar items in EconPapers)
JEL-codes: H71 H77 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe and nep-ure
Date: 2009-01
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Downloads: (external link)
http://sticerd.lse.ac.uk/dps/eopp/eopp04.pdf (application/pdf)

Related works:
Working Paper: Local Spending, Transfers and Costly Tax Collection (2012) Downloads
Working Paper: The flypaper effect revisited (2009) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:cep:stieop:004

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