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Changing needs, sticky budget: evidence from the geographic distribution of US federal grants

Larcinese, Valentino, Rizzo, Leonzio and Testa, Cecilia (2013) Changing needs, sticky budget: evidence from the geographic distribution of US federal grants. National Tax Journal, 66 (2). pp. 311-342. ISSN 0028-0283

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Abstract

Most US federal grants are allocated through arguably obsolete formulas, leading fast growing states to contend that they are not receiving their fair share of the budget. We shed lights on this issue analyzing the allocation of formula and nonformula grants during the period 1978-2002. We find that states with fast growing population are penalized in the allocation of formula programs. The estimated losses are sizeable and heavily concentrated among the three fastest growing states. Nevertheless, the majority of the US states is on the winning side, thus providing a plausible explanation for the status quo bias in budgetary formulas.

Item Type: Article
Official URL: http://ntanet.org/publications/national-tax-journa...
Additional Information: © 2013 National Tax Association
Divisions: Government
STICERD
Subjects: H Social Sciences > HJ Public Finance
JEL classification: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Economic Models of Political Processes: Rent-Seeking, Elections, Legislatures, and Voting Behavior
H - Public Economics > H6 - National Budget, Deficit, and Debt > H61 - Budget; Budget Systems
H - Public Economics > H7 - State and Local Government; Intergovernmental Relations > H77 - Intergovernmental Relations; Federalism; Secession
Sets: Departments > Government
Collections > Economists Online
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Date Deposited: 22 Dec 2015 09:50
Last Modified: 20 Mar 2019 02:18
URI: http://eprints.lse.ac.uk/id/eprint/64776

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