@techreport{Kalb2008Impact,
abstract = {In this paper we use a simple bureaucracy model of fiscal illusion to analyze the impact of intergovernmental grants on the cost efficiency of local jurisdictions. We find that a higher degree of redistribution within a system of fiscal equalization or an increase in the amount of grants received by a local jurisdiction leads to an extension of organizational slack or X-inefficiency in that jurisdiction. This theoretical prediction is tested by conducting an empirical analysis using a broad panel of German municipalities. The results of the empirical analysis are consistent with the theoretical findings and therefore support the existence of a negative incentive effect of intergovernmental grants on local authorities' cost efficiency.},
address = {Mannheim},
author = {Alexander Kalb},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {H11; H77; 330; Cost efficiency; Fiscal equalisation; Intergovernmental grants; Bureaucracy; Stochastic frontier analysis; German municipalities; Finanzausgleich; Kommunaler Finanzausgleich; Kommunalverwaltung; B\"{u}rokratietheorie; Technische Effizienz; Fiskalillusion; Wirtschaftlichkeit; Theorie; Deutschland; organizational slack},
language = {eng},
number = {08-051},
publisher = {Zentrum f\"{u}r Europ\"{a}ische Wirtschaftsforschung (ZEW)},
title = {The Impact of Intergovernmental Grants on Cost Efficiency: Theory and Evidence from German Municipalities},
type = {ZEW Discussion Papers},
url = {http://hdl.handle.net/10419/24747},
year = {2008}
}
