Fiscal Illusion and the Grantor Government
构建了一个包含拨款政府的更一般化的财政幻觉模型，解决了以往模型中的不一致问题，并实证检验了拨款幻觉会同时增加受款政府产出和减少拨款政府产出的假说。
Empirical studies indicate that unconditional intergovernmental grants have a flypaper effect. Several authors have modeled recipient government spending under fiscal illusion to explain this phenomenon. In short, grants reduce the perceived marginal cost of recipient government output. This paper develops a more general model of illusion that incorporates the grantor government, thereby eliminating inconsistencies encountered in previous models. The more general model implies that grant finance increases the perceived marginal cost of grantor government output. Thus grant-induced illusion should have two effects: an increase in recipient output and a decrease in grantor output. The empirical work supports this hypothesis.