Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/147351
Authors: 
Kauder, Björn
Potrafke, Niklas
Reischmann, Markus
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper 6097
Abstract: 
We investigate whether politicians award intergovernmental grants to core supporters. Our new dataset contains information on discretionary project grants from a German state government to municipalities over the period 2008-2011. The results show that discretionary grants were awarded to municipalities with many core supporters of the incumbent state government. Discretionary grants per capita increased by about 1.4 percent when the vote share of the incumbent party in the state election increased by one percentage point. The fiscal capacity of a municipality does, by contrast, not predict the level of discretionary grants. We propose to trim discretionary project grants to the benefit of formula-based grants.
Subjects: 
intergovernmental grants
discretionary grants
fiscal equalization
core supporters
electoral motives
JEL: 
D72
H72
H77
H81
Document Type: 
Working Paper

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