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Elections and de facto Expenditure Decentralization in Canada

Mario Jametti () and Marcelin Joanis

No 4791, CESifo Working Paper Series from CESifo

Abstract: This paper empirically investigates the underlying determinants of expenditure decentral- ization, based on the predictions of a new political economy model of partial decentralization. The analysis is based on an agency model, in which two levels of government are involved in the provision of a public good and voters are imperfectly informed about each government’s contribution to the good, creating a shared accountability problem. Under shared expenditure responsibility, the degree of decentralization is endogenous and depends on the relative politi- cal conditions prevailing at each level of government. Consistent with the model’s predictions, empirical results from a panel of Canadian provinces show that decentralization in a province increases with the electoral strength of the provincial government and decreases with the electoral strength of the federal government, in addition to being affected significantly by the partisan affiliation of both levels of government. A series of alternative empirical specifications, including an IV regression exploiting campaign spending data, are presented to assess the robustness of these results.

Keywords: fiscal decentralization; fiscal federalism; vertical interactions; partial decentralization; elections (search for similar items in EconPapers)
JEL-codes: D72 H77 R50 (search for similar items in EconPapers)
Date: 2014
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Related works:
Journal Article: Elections and de facto expenditure decentralization in Canada (2020) Downloads
Working Paper: Elections and de facto Expenditure Decentralization in Canada (2014) Downloads
Working Paper: Elections and de facto Expenditure Decentralization in Canada (2014) Downloads
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