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Fiscal Illusion and the Grantor Government in Canada

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  • Hammes, David L
  • Wills, Douglas T

Abstract

Recent work on the United States concludes that one or more illusions are responsible for the empirically observ ed "flypaper effect." Using annual Canadian data for the period 1962-84, the authors test the "single-illusion" and "dual-illusion" specifications currently in the literature. While the empirical res ults support the dual-illusion specification, it is not the unambiguo us choice over single-illusion specifications as previously found. Fu rther, the nature of the grant system in Canada raises questions abou t whether illusions or real factors produce the empirical results. Copyright 1987 by Oxford University Press.

Suggested Citation

  • Hammes, David L & Wills, Douglas T, 1987. "Fiscal Illusion and the Grantor Government in Canada," Economic Inquiry, Western Economic Association International, vol. 25(4), pages 707-713, October.
    • Handle: RePEc:oup:ecinqu:v:25:y:1987:i:4:p:707-13
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    Cited by:

    1. Hammed Amusa & Robert Mabunda & Ramos Mabugu, 2008. "Fiscal Illusion At The Local Sphere: An Empirical Test Of The Flypaper Effect Using South African Municipal Data1," South African Journal of Economics, Economic Society of South Africa, vol. 76(3), pages 443-465, September.
    2. Philip Grossman, 1989. "Fiscal decentralization and government size: An extension," Public Choice, Springer, vol. 62(1), pages 63-69, July.
    3. Sergey Sinelnikov & Pavel Kadochnikov & Ilya Trunin (ed.), 2006. "Fiscal Federalism in Russia: Soft Budget Constraints of Regional Governments," Books, Gaidar Institute for Economic Policy, edition 1, number 4, February.
    4. Stuart Landon, 1998. "Institutional Structure and Education Spending," Public Finance Review, , vol. 26(5), pages 411-446, September.
    5. Bev Dahlby, 2011. "The marginal cost of public funds and the flypaper effect," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(3), pages 304-321, June.
    6. Worthington, Andrew C & Dollery, Brian E, 1998. "The Political Determination of Intergovernmental Grants in Australia," Public Choice, Springer, vol. 94(3-4), pages 299-315, March.
    7. Sergey Sinelnikov & Pavel Kadochnikov & Ilya Trunin & Sergey Chetverikov & Marianne Vigneault, 2006. "Fiscal Federalism in Russia: Soft Budget Constraints of Regional Governments," Published Papers 47, Gaidar Institute for Economic Policy, revised 2012.
    8. Hammed Amusa & Ramos Mabugu & Robert Mabunda, 2008. "Fiscal Illusion at the Local Sphere: An Empirical Test of the Flypaper Effect using South African Municipal Data," Working Papers 072, Economic Research Southern Africa.
    9. Philippe Cyrenne & Manish Pandey, 2015. "Fiscal equalization, government expenditures and endogenous growth," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(2), pages 311-329, April.

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