The determinants of intergovernmental grants
Part of : Αρχείον οικονομικής ιστορίας ; Vol.XVII, No.2, 2005, pages 123-137
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123-137
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The allocation of grants across local municipalities has attracted the interest of both economic researchers and politicians. This is so because every system of grants raises very interesting questions concerning the equity, economic efficiency and the control of central government upon local government. This paper examines a question which has proved to be among the most difficult and contentious in grant Policy. It examines how grants are provided to localities in the case of Greece, under two rival governments putting emphasis on the political dimension of the subject. The regression results obtained are similar for the two governments which mean that both political parties followed the same policy regarding the allocation of grants among local governments. It was found that the size of population of the municipality and the political power of its mayor are the main factors which determine the allocation of grants.
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JEL classification: H70
