Fiscal Federalism and Electoral Accountability

Toke Aidt and Jayasri Dutta ()

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: We study the efficient allocation of spending and taxation authority in a federation in which federal politicians are exposed to electoral uncertainty. We show that centralization may, but need not, result in a loss of electoral accountability. We identify an important asymmetry between positive and negative externalities and show that centralization may not be efficient in economies with positive externalities even when regions are identical and centralization does not entail a loss of accountability. We also show that decentralization can only Pareto dominate centralization in economies with negative externalities.

Keywords: Fiscal federalism; local public goods; externalities; performance voting; turnout uncertainty; electoral accountabilit (search for similar items in EconPapers)
JEL-codes: D72 D78 H41 (search for similar items in EconPapers)
Date: 2010-04-30
New Economics Papers: this item is included in nep-cdm, nep-pbe, nep-pol and nep-ure
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Fiscal Federalism and Electoral Accountability (2017)
Working Paper: Fiscal Federalism and Electoral Accountability (2010)
Working Paper: Fiscal federalism and electoral accountability (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:1021

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