Abstract:

Numerous empirical analyses find that central government lump sum transfers to local governments increase local expenditure by more than increases in local income. In this study, whether central grants (transfers) cause the flypaper effect in Turkey is examined for the 2006-2014 period using a Panel Regression model. The results indicate that the central government lump sum transfers cause the flypaper effect and also local incomes influnce the local expenditure but not the same as lump sum transfers

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