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The economics of choice in the allocation of intergovernmental grants to local authories

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  • Gershon Alperovich

Abstract

The empirical study and modelling of processes and motivations behind government behavior has been relatively meager. This paper has formulated and estimated a model designed to explain the allocation of intergovernmental grants to local authorities. The model takes into consideration the fact that this process is governed by mixed motivations associated with both the desire to adopt policies and actions based on the concept of public interest and with the desire for re-election. The model was applied to data pertaining to 52 local authorities in Israel under two governments. The principal findings of the foregoing analysis can be summarized as follows. First, the behavioral mechanism operating beyond intergovernmental grants allocation is inherent in the political system and equally applies to the two governments. Second, this mechanism is governed both by factors representing objective criteria describing the needs of the populations and by political factors representing the desire for re-election. Differences in the behavior of the two governments seem to be significant as far as some objective variables are concerned, but are almost insignificant as far as the political variable is concerned. Third, as in other studies conducted in the U.S., our findings support the hypothesis that in their attempt to maximize the prospects for re-election, governments find it preferable to pursue policies which reward their supporters rather than ‘buy-off’ their opponents. Lastly, by allowing per-capita grants to be a non-monotonous function of the political variable, it was found that indeed both governments have increased per-capita grants as a function of POL up to a certain level and decreased it thereafter. Copyright Martinus Nijhoff Publishers 1984

Suggested Citation

  • Gershon Alperovich, 1984. "The economics of choice in the allocation of intergovernmental grants to local authories," Public Choice, Springer, vol. 44(2), pages 285-296, January.
    • Handle: RePEc:kap:pubcho:v:44:y:1984:i:2:p:285-296
    DOI: 10.1007/BF00118764
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    Cited by:

    1. Davide Luca & Andrés Rodríguez-Pose, 2014. "Electoral politics and regional development: assessing the geographical allocation of public investment in Turkey," Working Papers. Collection A: Public economics, governance and decentralization 1402, Universidade de Vigo, GEN - Governance and Economics research Network.
    2. Guccio, Calogero & Mazza, Isidoro, 2014. "On the political determinants of the allocation of funds to heritage authorities," European Journal of Political Economy, Elsevier, vol. 34(C), pages 18-38.
    3. Grégoire ROTA-GRAZIOSI & Emilie CALDEIRA, 2014. "La décentralisation dans les pays en développement : une revue de la littérature - Decentralization in developing countries: A literature review," Working Papers 201411, CERDI.
    4. Dahlby, Bev & Rodden, Jonathan & Wilson, Sam, 2009. "A Median Voter Model of the Vertical Fiscal Gap," Working Papers 2009-14, University of Alberta, Department of Economics.
    5. Jameson Boex, 2003. "The incidence of local government allocations in Tanzania," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0311, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    6. Reingewertz, Yaniv, 2014. "Fiscal Decentralization - a Survey of the Empirical Literature," MPRA Paper 59889, University Library of Munich, Germany.
    7. Emilie Caldeira, 2012. "Does the System of Allocation of Intergovernmental Transfers in Senegal Eliminate Politically Motivated Targeting?," Journal of African Economies, Centre for the Study of African Economies, vol. 21(2), pages 167-191, March.
    8. Lara E., Bernardo & Toro M., Sergio, 2019. "Tactical distribution in local funding: The value of an aligned mayor," European Journal of Political Economy, Elsevier, vol. 56(C), pages 74-89.
    9. Davide Luca & Andr�s Rodr�guez-Pose, 2015. "Distributive Politics and Regional Development: Assessing the Territorial Distribution of Turkey's Public Investment," Journal of Development Studies, Taylor & Francis Journals, vol. 51(11), pages 1518-1540, November.
    10. Maria Manuel Pinho & Linda Veiga, 2004. "The Determinants of Intergovernmental Grants in Portugal: a Public Choice Approach," ERSA conference papers ersa04p192, European Regional Science Association.
    11. Huang, Bihong & Chen, Kang, 2012. "Are intergovernmental transfers in China equalizing?," China Economic Review, Elsevier, vol. 23(3), pages 534-551.
    12. Shenghua Lu & Hui Wang, 2020. "Distributive politics in China: Regional favouritism and expansion of construction land," Urban Studies, Urban Studies Journal Limited, vol. 57(8), pages 1600-1619, June.
    13. Emilie Caldeira & Grégoire Rota-Graziosi, 2015. "La décentralisation dans les pays en développement : une revue de la littérature - Decentralization in developing countries: A literature review," CERDI Working papers halshs-01005204, HAL.
    14. Jameson Boex & Jorge Martinez-Vazquez, 2005. "The Determinants of the Incidence of Intergovernmental Grants: A Survey of the International Experience (2005)," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0509, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    15. Momi Dahan & Itamar Yakir, 2022. "Revealed political favoritism: evidence from the allocation of state lottery grants in Israel," Public Choice, Springer, vol. 190(3), pages 387-406, March.
    16. Davide Luca, 2013. "Regional development goals and distributive politics in the allocation of Turkey's central investments: socioeconomic criteria, parties and legislators' personal networks," ERSA conference papers ersa13p981, European Regional Science Association.
    17. Linda Gonçalves Veiga & Maria Manuel Pinho, 2005. "The Political Economy of Portuguese Intergovernmental Grants," NIPE Working Papers 8/2005, NIPE - Universidade do Minho.
    18. Sloan Margaret F., 2013. "The Substance of Things Hoped For: Do State Faith-Based and Community Partnership Offices and Liaisons Help Grassroots Organizations Get Federal Funding?," Nonprofit Policy Forum, De Gruyter, vol. 5(1), pages 111-137, November.
    19. Yannis Psycharis & Stavroula Iliopoulou & Maria Zoi & Panagiotis Pantazis, 2021. "Beyond the socio‐economic use of fiscal transfers: The role of political factors in Greek intergovernmental grant allocations," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(3), pages 982-1008, June.

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