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The Distributive Impact of Federal Fiscal Policy

The authors analyze the intraregional distribution patterns of federal expenditures across Southern Californian cities, using Consolidated Federal Funds Reports data from fiscal years 1983 to 1996. The findings suggest that although poorer cities benefit from larger amounts of anti-poverty funds, they receive lower amounts of other types of expenditure. Thus, the allocation of federal funds fails to promote fiscal equalization across cities and actually contributes to urban disparities. Regression analyses reveal that a city’s poverty level and its proportion of minorities and immigrants have a negative impact on federal expenditure, but its fiscal capacity and institutional strength have a positive impact.