Flypaper effect
Encyclopedia
The flypaper effect is the finding that "money sticks where it hits", like flies stick to flypaper
. The concept was first described in this metaphorical
way by Arthur Okun in response to the research of his colleague, Edward Gramlich
, published in 1979 as The Stimulative Effect of Government Grants. In that case, the finding was that a grant from federal government to local government would raise spending of that local government by a greater amount than an equivalent increase in local income. The boost to local income would be captured by the local government because that was where it first arrived and there would not be a fully equivalent reduction in local taxation or borrowing.
Flypaper
Flypaper is a fly-killing device made of paper coated with a sweetly fragrant, but extremely sticky or poisonous substance that traps flies and other flying insects when they land upon it.- Effectiveness :...
. The concept was first described in this metaphorical
Metaphor
A metaphor is a literary figure of speech that uses an image, story or tangible thing to represent a less tangible thing or some intangible quality or idea; e.g., "Her eyes were glistening jewels." Metaphor may also be used for any rhetorical figures of speech that achieve their effects via...
way by Arthur Okun in response to the research of his colleague, Edward Gramlich
Edward Gramlich
Edward M. Gramlich was a professor of economics at the University of Michigan and a former member of the Board of Governors of the Federal Reserve....
, published in 1979 as The Stimulative Effect of Government Grants. In that case, the finding was that a grant from federal government to local government would raise spending of that local government by a greater amount than an equivalent increase in local income. The boost to local income would be captured by the local government because that was where it first arrived and there would not be a fully equivalent reduction in local taxation or borrowing.