Abstract
T HE INCREASING DEPENDENCE of state and local governments on intergovernmental revenue is now widely recognized. The effects of such aid on subnational units of government is far less well understood, however. Of particular interest is the question of whether or not aid may merely be used as a substitute for funds that otherwise might be raised locally. That is, does intergovernmental revenue (IGR) stimulate recipient governments to spend more from their own sources, or is this aid largely substitutive?1 The following multivariate analysis over three time periods evaluates the
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