The Political Economy of New Deal Fiscal Federalism
John Joseph Wallis
,
3
(
29
)
Economic Inquiry
510-524
July
1991
Abstract
While the introduction of federal matching grants to finance the New Deal relief programs is usually viewed as a mechanism to insure federal control over state relief spending, a careful study of the New Deal reveals that the reverse was the case: matching grants allowed the states to escape close federal control. The standard economic model of inter-governmental grants reveals that the federal government will, if allowed, prefer to use discretionary rather than matching grants.