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Pressure Groups and Public Expenditures: The Flypaper Effect Reconsidered

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  • Dougan, William R
  • Kenyon, Daphne A

Abstract

A model of government budgeting is developed in which lobbying by interest group s can divert the allocation of funds away from the one preferred by t he median voter. The model is applied to state and local governments to show that the "flypaper effect"-the tendency for lump-sum grants to increase public expenditures by more than an equivalent increase in the community's pretax income-can be explained without the customa ry assumption of voter fiscal illusion. Furthermore, the model predic ts variation in the extent of the flypaper effect among expenditure c ategories, as found in previous empirical studies. Copyright 1988 by Oxford University Press.

Suggested Citation

  • Dougan, William R & Kenyon, Daphne A, 1988. "Pressure Groups and Public Expenditures: The Flypaper Effect Reconsidered," Economic Inquiry, Western Economic Association International, vol. 26(1), pages 159-170, January.
    • Handle: RePEc:oup:ecinqu:v:26:y:1988:i:1:p:159-70
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    Cited by:

    1. Burton Abrams & William Dougan, 1986. "The effects of constitutional restraints on governmental spending," Public Choice, Springer, vol. 49(2), pages 101-116, January.
    2. Yihua Yu & Jing Wang & Xi Tian, 2016. "Identifying the Flypaper Effect in the Presence of Spatial Dependence: Evidence from Education in China's Counties," Growth and Change, Wiley Blackwell, vol. 47(1), pages 93-110, March.
    3. Andrew Abbott & Philip Jones, 2016. "Fiscal Illusion and Cyclical Government Expenditure: State Government Expenditure in the United States," Scottish Journal of Political Economy, Scottish Economic Society, vol. 63(2), pages 177-193, May.
    4. 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.
    5. Eric Brunner & Joshua Hyman & Andrew Ju, 2020. "School Finance Reforms, Teachers' Unions, and the Allocation of School Resources," The Review of Economics and Statistics, MIT Press, vol. 102(3), pages 473-489, July.
    6. Abbott, Andrew & Jones, Philip, 2012. "Intergovernmental transfers and procyclical public spending," Economics Letters, Elsevier, vol. 115(3), pages 447-451.
    7. Roberto Dell'Anno & Vincenzo Maria De Rosa, 2013. "The Relevance of the Theory of Fiscal Illusion. The Case of the Italian Tax System," HISTORY OF ECONOMIC THOUGHT AND POLICY, FrancoAngeli Editore, vol. 2013(2), pages 63-92.
    8. Singhal, Monica, 2008. "Special interest groups and the allocation of public funds," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 548-564, April.
    9. Ivo Bischoff & Frédéric Blaeschke, 2013. "Incentives and Influence Activities in the Public Sector: the Trade-off in Performance Budgeting and Conditional Grants," MAGKS Papers on Economics 201320, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    10. Benoît Le Maux, 2009. "Governmental behavior in representative democracy: a synthesis of the theoretical literature," Public Choice, Springer, vol. 141(3), pages 447-465, December.
    11. Ivo Bischoff & Frédéric Blaeschke, 2012. "Window-Dressing and Lobbying in Performance-Budgeting: a Model for the Public Sector," MAGKS Papers on Economics 201212, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    12. Ross, Justin M. & Yan, Wenli, 2013. "Fiscal Illusion From Property Reassessment? An Empirical Test of the Residual View," National Tax Journal, National Tax Association;National Tax Journal, vol. 66(1), pages 7-32, March.
    13. Abbott, Andrew & Cabral, René & Jones, Philip & Palacios, Roberto, 2015. "Political pressure and procyclical expenditure: An analysis of the expenditures of state governments in Mexico," European Journal of Political Economy, Elsevier, vol. 37(C), pages 195-206.
    14. José Cruz, 2001. "An empirical application of the median voter model and of the interest group influence model to the Portuguese and Galician municipalities," ERSA conference papers ersa01p25, European Regional Science Association.
    15. Muhammed Islam, 1998. "Fiscal Illusion, Intergovernmental Grants and Local Spending," Regional Studies, Taylor & Francis Journals, vol. 32(1), pages 63-71.
    16. Laiyang Ke & Benedict S. Jimenez, 2024. "The interesting case of special and extraordinary items: What are they and how do they influence municipal government finances?," Public Budgeting & Finance, Wiley Blackwell, vol. 44(2), pages 69-89, June.
    17. Strumpf, Koleman S., 1998. "A predictive index for the flypaper effect," Journal of Public Economics, Elsevier, vol. 69(3), pages 389-412, September.
    18. Paula S. Kearns, 1994. "State budget periodicity: An analysis of the determinants and the effect on state spending," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 13(2), pages 331-362.
    19. Rui Nuno Baleiras, 2001. "To fragment or to consolidate jurisdictions: the optimal architecture of government," Nova SBE Working Paper Series wp401, Universidade Nova de Lisboa, Nova School of Business and Economics.
    20. Pablo Acosta, 2010. "The “flypaper effect” in presence of spatial interdependence: evidence from Argentinean municipalities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 44(3), pages 453-466, June.
    21. Pirade, Ramadhan & Jamali, Hisnol, 2018. "Evaluating Financial Performance In Local Government: A Study In South Sulawesi Province (Indonesia)," OSF Preprints rh9xw, Center for Open Science.
    22. Andrew Abbott & Philip Jones, 2013. "Procyclical government spending: a public choice analysis," Public Choice, Springer, vol. 154(3), pages 243-258, March.

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