State support under the new federalism

The new federalism will reduce total intergovernmental revenues to local governments. The reduction will be due to both the transfer to the states of much of the federal aid which previously flowed directly to local governments and reductions in total federal aid levels. Pass-through requirements on the shifted aid will not affect this general result but may soften the impact in many states. Because of differences in the extent to which state governments substitute federal pass-through aid for state aid from own-source revenues and in the degree to which different sources of revenues are treated differently by the states, local revenue reductions will vary greatly from state to state. The losses for local governments will range from 100% of the shifted aid in some states to as little as 15–20% in others.     

The states' scramble for federal funds: Who wins,who loses?

Interstate differences between federal expenditures and receipts are very large, generally favoring the southern and western states. The more slowly growing states of the northeast and midwest point to these imbalances as one source of their economic difficulties. The major source of disparity lies in revenue patterns, not in expenditure allocations. Reallocating federal expenditures on an equal per capita basis would reduce regional disparities in flows of federal funds by only about 25 percent. The principal regional beneficiary of equalized expenditures would be the midwest states of the Great Lakes region. However, contrary to the expectations of proponents of such redistribution, the southeastern states would also be major beneficiaries while the larger states of the mideast and New England would be hurt. Selective expenditure changes might be targeted more effectively to individual regions or states; but finding consistent, generally acceptable principles upon which to base such changes is a formidable problem.     

Does WIC work? The effects of WIC on pregnancy and birth outcomes

Support for WIC, the Special Supplemental Nutrition Program for Women, Infants, and Children, is based on the belief that "WIC works." This consensus has lately been questioned by researchers who point out that most WIC research fails to properly control for selection into the program. This paper evaluates the selection problem using rich data from the national Pregnancy Risk Assessment Monitoring System. We show that relative to Medicaid mothers, all of whom are eligible for WIC, WIC participants are negatively selected on a wide array of observable dimensions, and yet WIC participation is associated with improved birth outcomes, even after controlling for observables and for a full set of state-year interactions intended to capture unobservables that vary at the state-year level. The positive impacts of WIC are larger among subsets of even more disadvantaged women, such as those who received public assistance last year, single high school dropouts, and teen mothers.     

THE POTENTIAL FOR SIGNIFICANT INACCURACIES IN MERGER SIMULATION MODELS

This paper considers the role that merger simulation modelsshould play in European merger control. The use of these models,as off-the-shelf instruments to assess the economic effectsof mergers, has become increasingly widespread in recent years.However, contrary to some claims, merger simulation models donot allow investigators to avoid much of the competitive effectsanalysis relating to the relevant economic market, nor do theynecessarily provide more precision to merger control. Withoutunderstanding the limitations of such models and the circumstancesunder which they can and should be usefully applied, they maynot just be useless, but dangerous in the sense of providingpossibly spurious results with spurious claimed accuracy. Thispaper argues that any merger simulation models used should be"bespoke" models, rather than off-the-shelf models, but cautionsthat even bespoke models will frequently not be as useful asis often claimed. This is not to deny that there are occasionswhen well-constructed bespoke models are genuinely useful anddo offer genuine improvements in merger control.