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FISCAL ILLUSION AND THE GRANTOR GOVERNMENT IN CANADA
Authors:DAVID L. HAMMES  DOUGLAS T. WILLS
Abstract:
Recent work on the U.S. concludes that one or more illusions are responsible for the empirically observed "flypaper effect." Using annual Canadian data for the period 1962–84, we test the "single-illusion" and "dual-illusion" specifications currently in the literature. While the empirical results support the dual-illusion specification, it is not the unambiguous choice over single-illusion specifications as previously found. Further, the nature of the grant system in Canada raises questions about whether illusions or real factors produce the empirical results.
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