Portal Red Investigadores de Economía

An analysis of the flypaper effect under different institutional contexts is carried out for Colombia, where during the decentralization process different sub-national fiscal structures with different degrees of autonomy to manage transfers, expenditures, taxes and debt have coexisted. The analysis is carried out by using panel data models and alternative functional forms. The results show that the flypaper effect is observed when sub-national entities are highly dependent on intergovernmental transfers. An analysis of asymmetries in response to transfers shows that sub-national authorities try to cover the reduction in transfers when the percentage of transfers into the total current revenue is high. Copyright 2002 by Kluwer Academic Publishers

The Flypaper Effect under Different Institutional Contexts: The Colombian Case