Fiscal Federalism and Electoral Accountability

Toke S Aidt () and Jayasri Dutta ()

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

Abstract: We study the e¢ cient 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 e¢ cient 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)
New Economics Papers: this item is included in nep-cdm, nep-pbe, nep-pol and nep-ure
Date: 2010-04-30
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Related works:
Working Paper: Fiscal Federalism and Electoral Accountability (2010)
Working Paper: Fiscal federalism and electoral accountability (2010)
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Persistent link: http://EconPapers.repec.org/RePEc:cam:camdae:1021

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