The effects of structural shifts in the treatment of intergovernmental aid during the 1980s are tested using a sample of 1,929 rural counties with local road responsibilities. A dynamic model is used to test the hypothesis that local public officials treated intergovernmental aid differently after the Reagan/Bush policy of Fiscal Federalism was implemented. Empirical findings from the dynamic model are that federal aid was much more simulative at the end of the decade than in earlier years but the effects of state aid remained the same throughout the 1980s. These differences are attributed to a perception that federal aid is less certain and more transitory than permanent.


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