FISCAL ILLUSION AND LOCAL GOVERNMENT SPENDING IN MEXICO

Jorge Ibarra Salazar, André Varella Mollick

Resumo


In this paper we estimate the effect of transfers on expenditure of local Mexican governments. We find evidence of the flypaper effect over the years 1975 to 2000 in a partial sense. According to the linear model, and consistent with previous studies for postwar United States, the effect of grants at local expenditures is statistically positive (0.753) and at the grantor’s outlays is statistically negative (–3.250). The estimation in first-differences confirms only the result for local governments.  Therefore, as grants increase, state and municipal government outlays increase, while the statistic effect at the grantor’s level is not robust.


Texto completo:

PDF