The federal government would like to give grants to local


The federal government would like to give grants to local states to promote free medical vaccinations for children. However, because of a limited budget the federal government wishes to target its spending as evidently as possible.

a. Define what would be a matching grant, and explain why it could be preferable to a block grant.

b. Now consider a closed-end matching grant that matches state spending dollar for dollar up to a specified amount, at which point the subsidy is phased out. Do you think a closed-end matching grant is preferable to an open-end matching grant?

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Econometrics: The federal government would like to give grants to local
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