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Working Paper

A Bureaucratic Theory of Flypaper Effects

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One well-documented pattern in local public finance is that, in comparison with what is spent out of residents’ private income, a disproportionate amount of the lump-sum aid received from higher levels of government is used to increase expenditures rather than reduce local taxes. This paper shows how a bureaucratic model of the type suggested by Niskanen (1971) can be used to explain this behavior. A test of the model, using 115 small city governments in Michigan, finds that the bureaucratic model explains capital expenditures well, while operating expenditures appear to be better explained by the standard median voter model.
06.01.1985ISSN 2573-7953 WP 85-01

Working Papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded official Federal Reserve Bank of Cleveland publications. The views expressed in this paper are those of the authors and do not represent the views of the Federal Reserve Bank of Cleveland or the Federal Reserve System.

Suggested Citation

Wyckoff, Paul Gary. 1985. “A Bureaucratic Theory of Flypaper Effects.” Federal Reserve Bank of Cleveland, Working Paper No. 85-01.