Different Forms of Outside Aid: a Collective-Choice Model for Predicting Effects On Local Educational Expenditure

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Abstract
This article presents a method for predicting the effects of different forms of outside aid on local educational expenditure. The predictive power of the suggested method is demonstrated with an experiment using district-level data collected for the State of Virginia. The paper also tests the recent theoretical results of David Bradford and Wallace Oates who have argued (1) that in a median-voter setting matching grants are more stimulative than lump sum grants of the same amount, and (2) that under certain conditions lump sum grants are equivalent in their effects to a reduction in federal and state personal taxes. The test results are favorable.

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