Hostname: page-component-cd9895bd7-p9bg8 Total loading time: 0 Render date: 2024-12-23T19:37:59.944Z Has data issue: false hasContentIssue false
  • English
  • Français

The Political Economy of Federalism

Published online by Cambridge University Press:  01 December 1985

John E. Chubb
John E. Chubb*
Affiliation:
The Brookings Institution
Get access Rights & Permissions [Opens in a new window]

Abstract

This article introduces a theoretical framework and an econometric methodology for analyzing the increasingly important effects of the national government on the federal system. The framework is a synthesis of the dominant political and economic approaches to this issue: it attempts to capture key elements of the complex political and administrative processes that implementation research has identified in contemporary federalism, and to exploit formal models of local fiscal choice used to analyze the impact of federal grants on state and local spending and taxing. The vehicle for the synthesis is a principal-agent model which represents the federal system as a formal hierarchy extending from Congress and the president to subnational bureaucrats. An econometric analysis of two major federal grant programs in each state for the years, 1965-1979, demonstrates that 1) economic models alone cannot explain the effects of federal grants on subnational fiscal behavior; politics must be included, and 2) the political effects can be disaggregated into ideological and constituency-oriented demands made by Congress and the White House on federal grant agencies.

Type
Research Article
Information
American Political Science Review , Volume 79 , Issue 4 , December 1985 , pp. 994 - 1015
Copyright
Copyright © American Political Science Association 1985

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Advisory Commission on Intergovernmental Relations. A catalog of federal grant-in-aid programs to state and local governments: Grants funded FY 1981. Washington, D.C.: GPO, February 1982.Google Scholar
Alchian, A. A., & Demsetz, H. Production, information costs, and economic organization. American Economic Review, 1972, 62, 777–795.Google Scholar
Arnold, R. D. Congress and the bureaucracy. New Haven, Conn.: Yale University Press, 1979.Google Scholar
Bardach, E. The implementation game. Cambridge, Mass.: MIT Press, 1977.Google Scholar
Barr, J., & Davis, O. An elementary political and economic theory of local governments. Southern Economic Journal, 1966, 33, 149–165.10.2307/1055384CrossRefGoogle Scholar
Beck, N. Presidential influence on the federal reserve in the 1970s. American Journal of Political Science, 1982, 26, 415–445.10.2307/2110936CrossRefGoogle Scholar
Benson, C. S. Centralization and legalization in vocational education. In Kirp, D. (Ed.). Schooldays, rule days. Philadelphia: Falmer Press, 1985.Google Scholar
Bergstrom, T. C., & Goodman, R. P. Private demands for public goods. American Economic Review, 1973, 63, 280–296.Google Scholar
Borcherding, T. E., & Deacon, R. T. The demand for the services of non-federal governments. American Economic Review, 1972, 62, 891–901.Google Scholar
Bradford, D. F., & Oates, W. E. Towards a predictive theory of intergovernmental grants. American Economic Review, 1971, 61, 440–448.Google Scholar
Bradford, D. F., & Kelejian, H. An econometric model of flight to the suburbs. Journal of Political Economy, 1973, 83, 571–594.Google Scholar
Calvert, R., & Weingast, B. The nature and measurement of influence over policymaking: The case of the FTC. Presented at Annual Meeting of American Political Science Association. Washington, D.C., 1984.Google Scholar
Cary, W. L. Politics and the regulatory agencies. New York: McGraw-Hill, 1967.Google Scholar
Chubb, J. E. Interest groups and the bureaucracy. Stanford, Calif.: Stanford University Press, 1983.Google Scholar
Chubb, J. E. The political economy of federal aid to education. Stanford: Institute for Research on Educational Finance and Governance. Working Paper, 1984. (a)Google Scholar
Chubb, J. E. A structural perspective on federalism. Presented at the Conference on Adaptive Institutions, Stanford University, 1984. (b)Google Scholar
Chubb, J. E. Excessive regulation: The case of federal aid to education. Political Science Quarterly, 1985, 100, 287–311.10.2307/2150657CrossRefGoogle Scholar
Congressional Budget Office. An analysis of President Reagan's budget revisions for the fiscal year 1982. March, 1981, Staff Working Paper.Google Scholar
Courant, P. N.. Gramlich, E. M., & Rubinfeld, D. L. The stimulative effects of intergovernmental grants: Or why money sticks where it hits. In Mieszkowski, P. & Oakland, W. (Eds.). Fiscal federalism and grants-in-aid. Washington, D.C.: The Urban Institute, 1979.Google Scholar
Craig, S. G., & Inman, R. P. Federal aid and public education: An empirical look at the new fiscal federalism. The Review of Economics and Statistics, 1982, 64, 541–552.10.2307/1923938CrossRefGoogle Scholar
Dodd, L., & Schott, R. L. Congress and the administrative state. New York: Wiley, 1979.Google Scholar
Elazar, D. J., et al. Cooperation and conflict: Readings in American federalism. Itasca, Ill.: F.E. Peacock, 1969.Google Scholar
Executive Office of the President. Office of Management and Budget. Budget of the United States Government fiscal year 1984. Washington, D.C.: Government Printing Office, 1984.Google Scholar
Fama, E. F., & Jensen, M. C. Agency problems and residual claims. Journal of Law and Economics, 1983, 27, 327–349.10.1086/467038CrossRefGoogle Scholar
Feldstein, M. The effect of a differential add-on grant: Title I and local education spending. Journal of Human Resources, 1977, 13, 443–458.10.2307/145257CrossRefGoogle Scholar
Fiorina, M. Congress: Keystone of the Washington establishment. New Haven, Conn.: Yale University Press, 1977.Google Scholar
Gramlich, E. M. Alternate federal policies for stimulating state and local expenditures: A comparison of their effects. National Tax Journal, 1968, 21, 119–129.10.1086/NTJ41791587CrossRefGoogle Scholar
Gramlich, E. M. The effects of federal grants on state-local expenditures: A review of the econometric literature. Proceedings of the 62nd Annual Conference on Taxation. Lexington, Ky.: National Tax Association, 1969, 569–593.Google Scholar
Gramlich, E. M. Intergovernmental grants: A review of the empirical literature. In Oates, W. E. (Ed.). The political economy of fiscal federalism. Lexington, Mass.: Lexington Books, 1977.Google Scholar
Gramlich, E. M., & Rubinfeld, D. L. Micro estimates of public spending demand functions and tests of the Tiebout and median voter hypotheses. Journal of Political Economy, 1982, 90, 536–560.10.1086/261073CrossRefGoogle Scholar
Grodzins, M. The American system: A new view of government in the United States. In Elazar, D. J. (Ed.). Chicago: Rand McNally, 1966.Google Scholar
Henderson, J. Local government expenditures: A social welfare analysis. Review of Economics and Statistics, 1968, 50, 156–163.10.2307/1926191CrossRefGoogle Scholar
Hill, P. T. Enforcement and informal pressure in the management of federal categorical programs in education. Santa Monica: Rand Corporation, 1979.Google Scholar
Holl, M. The Title I supplanting prohibition. NOLPE School Law Journal, 1980, 9, 23–37.Google Scholar
Holmstrom, B. R. Moral hazard and observability. Bell Journal of Economics, 1979, Spring, 74–91.10.2307/3003320CrossRefGoogle Scholar
Inman, R. P. Testing political economy's ‘as if’ proposition: Is the median voter really decisive? Public Choice, 1978, 33, 45–66.10.1007/BF03187595CrossRefGoogle Scholar
Inman, R. P. The fiscal performance of local governments: An interpretive review. In Mieszkowski, P. & Straszheim, M. (Eds.). Current issues in urban economics. Baltimore: Johns Hopkins University Press, 1979.Google Scholar
Jensen, M. C. Organization theory and methodology. The Accounting Review, 1983, 5, 319–337.Google Scholar
Kirst, M., & Jung, R. The utility of a longitudinal perspective in assessing implementation: A thirteen year view of ESEA, Title I. Education Evaluation and Policy Analysis, 1980, 2, 17–34.10.3102/01623737002005017CrossRefGoogle Scholar
Ladd, H. F. Local education expenditures, fiscal capacity, and the composition of property tax base. National Tax Journal, 1975, 28, 145–158.10.1086/NTJ41862049CrossRefGoogle Scholar
Lowi, T. J. The end of liberalism (2nd ed.). New York: Norton, 1979.Google Scholar
Maddala, G. Econometrics. New York: McGraw-Hill, 1977.Google Scholar
Mazmanian, D., & Sabatier, P. The conditions of effective implementation: A guide to accomplishing policy objectives. Policy Analysis, 1979, 5, 481–504.Google Scholar
McCubbins, M., & Schwartz, T. Congressional oversight overlooked: Police patrols versus fire alarms. American Journal of Political Science, 1984, 28, 165–179.10.2307/2110792CrossRefGoogle Scholar
Miller, G. J., & Moe, T. M. Bureaucrats, legislators, and the size of the government. The American Political Science Review, 1983, 77, 297–329.10.2307/1958917CrossRefGoogle Scholar
Moe, T. M. Regulatory performance and presidential administration. American Journal of Political Science Review, 1985, 79, 1094–1116.10.2307/1956250CrossRefGoogle Scholar
Moe, T. M. The new economics of organization. American Journal of Political Science, 1984, 28, 739–777.10.2307/2110997CrossRefGoogle Scholar
Moe, T. M. Control and feedback in economic regulation: The case of the NLRB. American Political Science Review, 1985, 79, 000-000.10.2307/1956250CrossRefGoogle Scholar
Musgrave, R. A., The theory of public finance. New York: McGraw-Hill, 1959.Google Scholar
National Institute of Education. Administration of compensatory education. Department of Health, Education, and Welfare. September 19, 1977.Google Scholar
Niskanen, W. Bureaucracy and representative government. Chicago: Aldine-Atherton, 1971.Google Scholar
Oates, W. E. Fiscal federalism. New York: Harcourt, Brace, Jovanovich, 1972.Google Scholar
Ogul, M. J. Congress oversees the bureaucracy. Pittsburgh: Pittsburgh Press, 1976.Google Scholar
Peterson, P. E. City limits. Chicago: University of Chicago Press, 1981.10.7208/chicago/9780226922645.001.0001CrossRefGoogle Scholar
Peterson, P. E., & Wong, K. K. Toward a differentiated theory of federalism. Research in Urban Policy, 1985, 1, 301–324.Google Scholar
Phillips, L., & Votey, H. Crime control in California. Journal of Legal Studies, 1975, 4, 327–350.10.1086/467535CrossRefGoogle Scholar
Pindyck, R., & Rubinfeld, D. Econometric models and economic forecasts. New York: McGraw-Hill, 1981.Google Scholar
Pressman, J., & Wildavsky, A. Implementation. Berkeley: University of California Press, 1973.Google Scholar
Romer, T., & Rosenthal, H. The elusive median voter. Journal of Public Economics, 1979, 12, 143–170.10.1016/0047-2727(79)90010-0CrossRefGoogle Scholar
Rose-Ackerman, S. Beyond Tiebout: Modeling the political economy of local government. In Local provision of the public services: The Tiebout model after twenty-five years. New York: Academic Press, 1983.Google Scholar
Ross, S. A. The economic theory of agency: The principal's problem. American Economic Review, 1973, 12, 134–139.Google Scholar
Samuelson, P. A. The pure theory of public expenditures. Review of Economics and Statistics, 1954, 36, 387–389.10.2307/1925895CrossRefGoogle Scholar
Spence, M. The economics of internal organization: An introduction. Bell Journal of Economics, 1975, Spring, 163–172.10.2307/3003219CrossRefGoogle Scholar
Spence, M., & Zeckhauser, R. Insurance, information, and individual action. American Economic Review, 1971, 61, 380–387.Google Scholar
Stigler, G. Tenable range of functions of local government. In Joint Economic Committee, Federal expenditure policy for growth and stability. Washington, D.C.: Government Printing Office, 1957.Google Scholar
Tiebout, C. M. A pure theory of local expenditures. Journal of Political Economy, 1956, 6, 416–424.10.1086/257839CrossRefGoogle Scholar
Weingast, B. R., & Moran, M. Bureaucratie discretion or congressional control: Regulatory policymaking by the Federal Trade Commission. Journal of Political Economy, 1983, 91, 765–800.10.1086/261181CrossRefGoogle Scholar
Williamson, O. E. Markets and hierarchy. New York: Free Press, 1975.Google Scholar
Zellner, A. An efficient method of estimating seemingly unrelated regressions and tests for aggregation bias. Journal of the American Statistical Association, 1962, 54, 348–368.10.1080/01621459.1962.10480664CrossRefGoogle Scholar
Submit a response

Comments

No Comments have been published for this article.