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