This paper will discuss how the distribution of decentralized grants for Portuguese municipalities affects the evolution of the total amounts given by the Portuguese government to Portuguese municipalities. After a review of the literature I discuss a model based on a Bergson–Samuelson function. I used official data (from Portuguese Budget Reports) since 1982 for studying the decentralized grants. I also regress on other Portuguese time series in order to control for the effect of inequality series. Applying cointegration techniques and testing the causality direction, I conclude that there is a statistical validation that, as the distribution becomes more unequal, the total amounts of the transferred grants decrease.
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