Flypaper Theory

Economist Arthur Okun coined the metaphorical term "flypaper effect" in response to research by economist Edward Gramlich, whose 1979 publication The Stimulative Effects of Intergovernmental Grants formalized empirical findings from the late 1960s. James Henderson (1968) and Gramlich (1969) conducted foundational research showing that government grants "stick where they hit"—increasing local public spending more than equivalent increases in private income. The metaphor captures how fiscal transfers adhere to government budgets like flies to flypaper.