A MINIMALIST MODEL OF FEDERAL-GRANTS AND FLYPAPER EFFECTS

This paper shows that 'flypaper effects' can be observed for unconditi onal federal grants, even in the absence of agenda-setters, voting int ransitivities, informational asymmetries, etc. In a simple representat ion of a regime of federal, general revenue grants, median citizen-vot ers are decisive over the levels of grants, taxation and spending. By assumption, federal grants received equal federal taxes paid in each r ecipient locality. The size of the federal grant varies endogenously w ith demand conditions and the efficiency of tax technologies. The appa rent flypaper effects, positive or negative, vary with the source of t he change in grants.