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Policy Experimentation and Intergovernmental Grants in a Federal System

Author

Listed:
  • Giampaolo Garzarelli

    (Department of Social Sciences and Economics, Sapienza University of Rome, Italy & IPEG, Johannesburg, South Africa.)

  • Lyndal Keeton

    (IPEG & School of Economic and Business Sciences, University of the Witwatersrand, Johannesburg, South Africa.)

Abstract

Policymaking is a challenging production activity. A public sector organization that is often invoked to aid with this challenging activity is fiscal federalism, for a federation can act as a laboratory for policy experimentation. Yet there is no approach linking laboratory federalism to intergovernmental grants. This lacuna is puzzling, for grants are fundamental policy tools for federations. We develop an approach that fills this lacuna by interpreting grants as fiscal institutions for policy innovation: policy experimentation is encouraged or discouraged depending on the degree of grant conditionality, and a simple heuristic expresses mistake-ridden learning from experimentation.

Suggested Citation

  • Giampaolo Garzarelli & Lyndal Keeton, 2016. "Policy Experimentation and Intergovernmental Grants in a Federal System," Working Papers 8/16, Sapienza University of Rome, DISS.
    • Handle: RePEc:saq:wpaper:8/16
    as

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    File URL: http://www.diss.uniroma1.it/sites/default/files/allegati/DiSSE_Garzarelli_Keeton_wp8_2016.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Fiscal institutional design through political compromise; Incentives in laboratory federalism; Intergovernmental grant conditionality; Policy innovation through trial and error; Policy experimentation space.;
    All these keywords.

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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