The Korea Local Administration Review

The aim of this study is to test non-linear-changes of local government's fungibility along the expenditure level of specific grants. The unit of analysis is general account of specific grants on 250 local governments during 2002~ 2007. Analysis model is drawn from the function composed of visibility of national grants, opportunity of fungibility, and fungibility incentives. Analysis results with Panel and Quantile regression are as follows. First, fungibility coefficient is almost zero at overall level. Second, the fungibility coefficients are fluctuated according to the expenditure, and inflection points appear frequently in the scope of middle quantile. Third, the fungibility coefficients are small consistently, since introduction of grant of decentralization subsidies (GDS), which is likely that the attribution of GDS having both characters of general and specific grants could affect the distributional efficiency of national grants through local government’s incentive change of fungibility.
 
□ Keywords: national grants, fungibility, quantile regression