nep-pol New Economics Papers
on Positive Political Economics
Issue of 2005‒08‒03
one paper chosen by
Eugene Beaulieu
University of Calgary

  1. Voters as a Hard Budget Constraint: On the Determination of Intergovernmental Grants By Lars P. Feld; Christoph A. Schaltegger

  1. By: Lars P. Feld; Christoph A. Schaltegger
    Abstract: Recent empirical literature has shown that the determination of intergovernmental grants is highly influenced by the political bargaining power of the recipient states. In these models federal politicians are assumed to buy the support of state voters, state politicians and state interest groups by providing grants. In this paper we provide evidence that the fiscal referen-dum reduces the reliance of states on matching grants received from the central government and thus the possibility of state interest groups and state bureaucrats to obtain more grants. If referendums are available, voters serve as a hard budget constraint.
    Keywords: Budget Referendums; Intergovernmental Grants; Interest Group Influence
    JEL: D7 D72 H77
    Date: 2005–06

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