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Autoren: 
Kalb, Alexander
Datum: 
2008
Reihe/Nr.: 
ZEW Discussion Papers 08-051
Zusammenfassung: 
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.
Schlagwörter: 
Cost efficiency
Fiscal equalisation
Intergovernmental grants
Bureaucracy
Stochastic frontier analysis
German municipalities
JEL: 
H11
H77
Dokumentart: 
Working Paper
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