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The Distribution of Revenue-Sharing Funds and Local Public Expenditure Needs

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  • Gerald E. Auten

    (University of Missouri, Columbia)

Abstract

This paper examines the intrastate distribution of revenue-sharing funds using a cross-section sample of New York communities. The concept of needs is discussed, and a measure of local public expenditure needs is derived from aggregate consumption function theory. This measure of local public expenditure needs is used along with a measure of local fiscal capacity in examining the distribution of revenue-sharing funds. Revenue-sharing funds are found to be positively correlated with estimated expenditure needs but negatively correlated with the “gaps†between expenditure needs and local fiscal resources. It is suggested that the reason for these results is that the revenue-sharing allocation formula does not include an adequate measure of local fiscal capacity.

Suggested Citation

  • Gerald E. Auten, 1974. "The Distribution of Revenue-Sharing Funds and Local Public Expenditure Needs," Public Finance Review, , vol. 2(3), pages 352-375, July.
    • Handle: RePEc:sae:pubfin:v:2:y:1974:i:3:p:352-375
    DOI: 10.1177/109114217400200305
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    References listed on IDEAS

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    1. Milton Friedman, 1957. "Introduction to "A Theory of the Consumption Function"," NBER Chapters, in: A Theory of the Consumption Function, pages 1-6, National Bureau of Economic Research, Inc.
    2. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65(2), pages 135-135.
    3. George J. Stigler, 1945. "The Cost of Subsistence," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 27(2), pages 303-314.
    4. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1.
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    Cited by:

    1. Audun Langørgen, 2015. "A structural approach for analyzing fiscal equalization," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(3), pages 376-400, June.

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