In the context of China without a median voter system, this study examines whether the “flypaper effect”, an unconditional lump-sum grant from the upper governments to the county governments increases spending in a greater proportion than an equivalent rise in local income, holds true in China. Using China’s county-level education data during 2007, the models have been estimated using a spatial...

(Abstract) According to one theory, consumer-voters mistake the lump-sum aid for matching aid such that the former reduces their tax price of the aided service, generating the substitution effect. This flypaper effect is more likely when both lump-sum aid and matching aid (or equivalent tax-price reducing mechanisms) coexist and there is a high likelihood of interaction between the lump-sum aid...

abstract the present study attempted to experimentally analyze the effect of fiscal illusion in the form of flypaper effect on spending demand levels of provincial governments in iran. to this aim, theoretical foundations and literature review were presented, and then the model used for investigation was specified. finally, using time series data for provinces of iran during 2000-2013 estimatio...

The purpose of this article is to propose a reinterpretation of the traditional flypaper effect according to which central government transfers to local governments increase public spending by more than do increases in private income. Here, higher transfers from the federal government might induce less efficiency in local tax collection opposed to the income effect. Initially, we build a model ...

The ‘flypaper effect’ is not an anomaly” by John E. Roemer and Joaquim Silvestre & University of California, Davis An in-kind subsidy is equivalent, both theoretically and empirically, to an increase of income for an individual consumer. But the equivalence does not empirically carry over to in-kind grants by a central government to a local one: ...

This study investigates the spatial heterogeneity of flypaper effect in a sample 2,451 Spanish municipalities over period 2003–2015 by means Bayesian panel data econometric te...