Agency, allocation and distribution - evidence on the motivation of central to local transfers

Abstract

This paper examines fiscal relations between central and local government in Ireland for four years between 1960 and 1972. Its main conclusion is that the evidence does not support a simple principal-agent relationship, but is consistent with a degree of local autonomy in choosing levels and composition of spending. Central government is better understood as using transfers to pursue allocative and distributive objectives, directly and indirectly, within and between counties, than as treating local authorities as its spending agents.