An Analysis of the Flypaper and Fungibility Effects of Intergovernmental Revenue on Municipal Operating and Capital Budgets
Description:
The flypaper effect states that grants-in-aid increases public spending more than a comparable increase in personal income. If aid increases spending, then there is the possibility that it displaces own-source revenue or a portion of the aid itself is used to meet other priorities of governments, fungibility. Different local government structures have the tendency to prioritize either the operating or capital budget. Empirical evidence shows that federal and state grants have different flypaper…
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Date:
May 2020
Creator:
Boadu, Bernard