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Economics of Governance

, Volume 3, Issue 2, pp 153–170 | Cite as

The flypaper effect and political strength

  • Per Tovmo
  • Torberg Falch
Original Paper

Abstract.

Simple models of local government behavior predict equal effects of private income and unconditional federal grants on local government expenditures. Numerous empirical analyses, however, find that the effect of grants is larger than the income effect. We argue that this flypaper effect may be a result of weak political leaderships in multi–issue and multi–party decision–making environments. In multi–issue institutions, a strong political leadership may reduce inefficiency due to interest group influence and inter–party bargaining in the local council. Utilizing data for Norwegian local governments in the 1930s, we find that political strength reduces the size of the flypaper effect. When the local council consists of only one political party, we cannot reject absence of a flypaper effect, while the flypaper effect is large in fragmented local councils.

Key words: flypaper effect, local public finance, political strength 
JEL classification: D72, H72 

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Copyright information

© Springer-Verlag Berlin Heidelberg 2002

Authors and Affiliations

  • Per Tovmo
    • 1
  • Torberg Falch
    • 1
  1. 1.Department of Economics, Norwegian University of Science and Technology, N–7491 Trondheim, Norway (e-mail: pert@svt.ntnu.no, torberg.falch@svt.ntnu.no) NO

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