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The Political Economy of Federalism

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  • Chubb, John E.

Abstract

This article introduces a theoretical framework and an econometric methodology for analyzing the increasingly important effects of the national government on the federal system. The framework is a synthesis of the dominant political and economic approaches to this issue: it attempts to capture key elements of the complex political and administrative processes that implementation research has identified in contemporary federalism, and to exploit formal models of local fiscal choice used to analyze the impact of federal grants on state and local spending and taxing. The vehicle for the synthesis is a principal-agent model which represents the federal system as a formal hierarchy extending from Congress and the president to subnational bureaucrats. An econometric analysis of two major federal grant programs in each state for the years, 1965-1979, demonstrates that 1) economic models alone cannot explain the effects of federal grants on subnational fiscal behavior; politics must be included, and 2) the political effects can be disaggregated into ideological and constituency-oriented demands made by Congress and the White House on federal grant agencies.

Suggested Citation

  • Chubb, John E., 1985. "The Political Economy of Federalism," American Political Science Review, Cambridge University Press, vol. 79(4), pages 994-1015, December.
  • Handle: RePEc:cup:apsrev:v:79:y:1985:i:04:p:994-1015_23
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    Cited by:

    1. Brennan, G. & Pincus, J. J., 1996. "A minimalist model of federal grants and flypaper effects," Journal of Public Economics, Elsevier, vol. 61(2), pages 229-246, August.
    2. Jeremy L. Hall, 2010. "The Distribution of Federal Economic Development Grant Funds: A Consideration of Need and the Urban/Rural Divide," Economic Development Quarterly, , vol. 24(4), pages 311-324, November.
    3. Mark Schneider, 1989. "Intercity competition and the size of the local public work force," Public Choice, Springer, vol. 63(3), pages 253-265, December.
    4. Laurence E. Lynn, 1994. "Public management research: The triumph of art over science," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 13(2), pages 231-259.
    5. Halsteinli, Vidar & Ose, Solveig Osborg & Torvik, Heidi & Hagen, Terje P., 2006. "Allocation of labour to somatic and psychiatric specialist care--The effects of earmarked grants," Health Policy, Elsevier, vol. 78(2-3), pages 115-127, October.
    6. Mark Schneider & Byung Ji, 1987. "The flypaper effect and competition in the local market for public goods," Public Choice, Springer, vol. 54(1), pages 27-39, January.
    7. Ellen Seljan, 2014. "The limits of tax and expenditure limits: TEL implementation as a principal-agent problem," Public Choice, Springer, vol. 159(3), pages 485-501, June.
    8. Andersson, Krister P. & Gibson, Clark C. & Lehoucq, Fabrice, 2006. "Municipal politics and forest governance: Comparative analysis of decentralization in Bolivia and Guatemala," World Development, Elsevier, vol. 34(3), pages 576-595, March.
    9. Riemer P. Faber & Pierre Koning, 2017. "Why not fully spend a conditional block grant?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(1), pages 60-95, February.
    10. Steven C. Deller & Craig S. Maher, 2006. "A Model of Asymmetries in the Flypaper Effect," Publius: The Journal of Federalism, CSF Associates Inc., vol. 36(2), pages 213-229.
    11. Herman L. Boschken, 1998. "Upper-middle-class Influence on Developmental Policy Outcomes: The Case of Transit Infrastructure," Urban Studies, Urban Studies Journal Limited, vol. 35(4), pages 627-647, April.
    12. Jessica Terman & Richard Feiock, 2015. "Third-Party Federalism: Using Local Governments (and Their Contractors) to Implement National Policy," Publius: The Journal of Federalism, CSF Associates Inc., vol. 45(2), pages 322-349.
    13. Geiguen Shin & Jeremy L. Hall, 2018. "Exploring the Influence of Federal Welfare Expenditures on State-Level New Economy Development Performance: Drawing From the Diffusion of Innovation Theory," Economic Development Quarterly, , vol. 32(3), pages 242-256, August.
    14. Mehiriz, Kaddour, 2016. "The impacts of intergovernmental grants on municipal infrastructure: Evidence from the Canada-Quebec infrastructure works 2000 program," Evaluation and Program Planning, Elsevier, vol. 58(C), pages 184-193.
    15. Juan González Alegre, 2012. "An evaluation of EU regional policy. Do structural actions crowd out public spending?," Public Choice, Springer, vol. 151(1), pages 1-21, April.
    16. Ilg Michael, 2017. "Profit, Persuasion, and Fidelity: Why People Follow the Rule of Law," The Law and Development Review, De Gruyter, vol. 10(2), pages 275-303, October.
    17. Schmidt, Torsten, 2001. "Finanzreformen in der Bundesrepublik Deutschland: Analyse der Veränderungen der Finanzverfassung von 1949 bis 1989," RWI Schriften, RWI - Leibniz-Institut für Wirtschaftsforschung, volume 67, number 67.

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