The flypaper effect revisited
Fernando Aragon ()
LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library
This paper argues that there is nothing anomalous about the flypaper effect. I develop a simple median voter model of government spending with costly tax collection that predicts the flypaper effect and provide a quantifiable measure of its magnitude. Using the model insights and previous estimates, I show that a tax rate between 8% to 16% would account for the flypaper effect observed in U.S. subnational governments.
Keywords: flypaper effect; intergovernmental transfers; public finance; fiscal decentralization (search for similar items in EconPapers)
JEL-codes: J1 E6 (search for similar items in EconPapers)
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http://eprints.lse.ac.uk/58199/ Open access version. (application/pdf)
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:ehl:lserod:58199
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