Assessing city responses to federal subventions

This paper reports on a series of case studies in which the consequences are examined of the major buildup in federal grants to urban areas over the 1970s in eleven major US cities. Conventional economic models of the impact of this buildup are argued to rely overmuch on assumptions about the manner in which local officials perceive and structure choices, neglecting important program features and ignoring variations across place and time in the structure of utility functions and in the types of behavior seen as likely to achieve a desired outcome. The case studies suggest that local uses of federal funds are structured by the uncertainty in both level and form of grant receipts and by a propensity for risk-aversion behavior on the part of local general-purpose officials.