Economics
Why Intergovernmental Fiscal Transfers Alter Subnational Policy Innovation Incentives
Quick fact
In many countries, a change in grant design—like increasing the matching rate from 50% to 75%—can double the number of innovative programs launched by local governments, because it halves the local cost of experimentation.
Why this is interesting
Ever wonder why some states experiment with bold policy ideas while others play it safe? The answer often lies in how the central government hands out money.