Federal Expenditure And Fiscal Illusion: An Australian Test Of The Flypaper Hypothesis

Dollery, Brian E. & Worthington, Andrew C. (1995) Federal Expenditure And Fiscal Illusion: An Australian Test Of The Flypaper Hypothesis. Publius: The Journal of Federalism, 25(1), pp. 23-34.


Despite the fact that there are strong a priori grounds for presuming that the intergovernmental grants characteristic of fiscal federalism in Australia may generate fiscal illusion, no empirical effort has been directed at this line of inquiry. The present article seeks to go at least some way towards remedying this deficiency by evaluating the flypaper variant of the fiscal illusion hypothesis using a time series analysis of Australian Commonwealth expenditures for 1981 to 1992. The results of these estimations provide some tentative empirical support for the existence of a flypaper effect on public expenditure in Australia for the period under review.

Impact and interest:

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ID Code: 2794
Item Type: Journal Article
Refereed: Yes
Additional URLs:
Keywords: Fiscal illusion, flypaper effect, public choice, local government
ISSN: 0048-5950
Subjects: Australian and New Zealand Standard Research Classification > STUDIES IN HUMAN SOCIETY (160000) > POLITICAL SCIENCE (160600) > Political Science not elsewhere classified (160699)
Australian and New Zealand Standard Research Classification > ECONOMICS (140000) > APPLIED ECONOMICS (140200) > Public Economics- Taxation and Revenue (140215)
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Copyright Owner: Copyright 1995 Center for the Study of Federalism
Deposited On: 05 Dec 2005 00:00
Last Modified: 05 Jan 2011 13:26

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