Using a discontinuous grant rule to identify the effect of grants on local taxes and spending

• 成果类型: Article; Proceedings Paper
• 署名作者: Dahlberg, Matz; Moerk, Eva; Rattso, Jorn; Agren, Hanna
• 署名单位: Uppsala University; Norwegian University of Science & Technology (NTNU)
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2007.05.004
• 发表日期: 2008
• 页码: 2320-2335
• 关键词: Fiscal federalism; grants; Local taxation; Local government expenditure; causal effects; Discontinuity analysis

摘要

When investigating the effects of federal grants on the behavior of lower-level governments, it is hard to defend the handling of grants as an exogenous factor. Federal governments often set grants based on characteristics and performance of decentralized governments. In this paper we make use of a discontinuity in the Swedish grant system in order to estimate the causal effects of general intergovernmental grants on local spending and local tax rates. The formula for the distribution of funds is used as an exclusion restriction in an IV-estimation. We find evidence of crowding-in, where federal grants are shifted to more local spending, but not to reduced local tax rates. (C) 2007 Elsevier B.V. All rights reserved.