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Even Some Lump-Sum Grants Can Stimulate More Than others

Author

Listed:
  • R R Barnett

    (Department of Public Administration, University of Ulster, Jordanstown BT37 0QB, Northern Ireland)

  • R Levaggi

    (Institute of Economic and Social Research, University of York, York YO1 5DD, England)

  • P Smith

    (Department of Economics, University of York, York YO1 5DD, England)

Abstract

In this paper, it is shown that the institutional context within which lump-sum grants are given can be an important determinant of local (or state) government expenditure responses to such grants. By using the system of local government finance that operated in England until 1990 as a case study, it was shown that the two lump-sum components of the grant system can be predicted to stimulate substantially different expenditure effects. And this is so despite the fact that both of the grants are unconditional lump-sum grants. A model was developed and tested in which the differential expenditure effects are explicitly taken into account and this modelling exercise stands up well when tested against the empirical evidence.

Suggested Citation

  • R R Barnett & R Levaggi & P Smith, 1991. "Even Some Lump-Sum Grants Can Stimulate More Than others," Environment and Planning C, , vol. 9(3), pages 257-265, September.
    • Handle: RePEc:sae:envirc:v:9:y:1991:i:3:p:257-265
    DOI: 10.1068/c090257
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    References listed on IDEAS

    as
    1. Moffitt, Robert, 1986. "The Econometrics of Piecewise-Linear Budget Constraints: A Survey and Exposition of the Maximum Likelihood Method," Journal of Business & Economic Statistics, American Statistical Association, vol. 4(3), pages 317-328, July.
    2. Barnett, Richard R & Levaggi, Rosella & Smith, Peter, 1991. "Does the Flypaper Model Stick? A Test of the Relative Performance of the Flypaper and Conventional Models of Local Government Budgetary Behaviour," Public Choice, Springer, vol. 69(1), pages 1-18, February.
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