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AbstractUsing data from 1977 to 2009, we explore whether the agency issuing federal aid to states influences the rate of state economic growth. We find that agencies' housing poverty alleviation programs, such as the Department of Health and Human Services and the Department of Labor, have negative effects. The Department of Commerce and the Department of Interior have consistent positive effects, although this last effect is due to inordinately disproportionate spending in the state of Wyoming. Overall growth effects are relatively modest, suggesting that potential future cuts to federal discretionary spending may not be as damaging as feared.

When a central authority orders a local subordinate government to take a certain course of action under penalty, it is more than likely that the enforcement of the order will lead to difficulties, and it may even result in open defiance on the part of the local government. The effect is very different, however, when the central authority merely establishes a standard and promises to turn over cold cash to the local units which meet the standard. With governmental units as with individuals, rewards for work properly done are more likely to produce desirable results than punishment for failure to obey orders.

"The Area Redevelopment Bookshelf of Community Aids." ; Mode of access: Internet. ; Supersedes Federal activities helpful to communities, published by the Office of Area Development, U.S. Dept. of Commerce.

"GAO/HRD-90-165." ; "September 1990." ; Running title: Funding for LIHEAP. ; "B-240849"--P. 1. ; Cover title. ; Mode of access: Internet.