Local Authority Grants and the Flypaper effect in England

Jean Mangan and Richard Ledward

Working Papers from Staffordshire University, Business School

Abstract: This paper investigates the ways in which grants can be incorporated into the median voter model of local government expenditure. Grants can either be viewed as having income or price effects. Oakes suggested grants might affect the average price as perceived by the median voter. Our initial estimates seem to support this idea. However, econometric problems require a re-estimation of the model. These results do not support the average price effect within a median voter model. Similar econometric problems would appear to apply to other estimations of the median voter model, but are not so easily treated.

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