Centralization and Accountability: Theory and Evidence from the Clean Air Act

Federico Boffa, Amedeo Piolatto and Giacomo Ponzetto

CERIS Working Paper from CNR-IRCrES Research Institute on Sustainable Economic Growth - Torino (TO) ITALY - former Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY

Abstract: This paper studies fiscal federalism when voter information varies across regions. We develop a model of political agency with heterogeneously informed voters. Rent seeking politicians provide public goods to win the votes of the informed. As a result, rent extraction is lower in regions with higher information. In equilibrium, electoral discipline has decreasing returns. Thus, political centralization efficiently reduces aggregate rent extraction. The model predicts that a region’s benefits from centralization are decreasing in its residents’ information. We test this prediction using panel data on pollutant emissions across U.S. states. The 1970 Clean Air Act centralized environmental policy at the federal level. In line with our theory, we find that centralization induced a differential decrease in pollution for uninformed relative to informed states.

Keywords: Political centralization; Government accountability; Imperfect information; Interregional heterogeneity; Elections; Environmental policy; Air pollution (search for similar items in EconPapers)
JEL-codes: D72 D82 H73 H77 Q58 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2012-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Should Different People Have Different Governments? (2015)
Working Paper: Should Different People Have Different Governments? (2015)
Working Paper: Should Different People Have Different Governments? (2015)
Working Paper: Political centralization and government accountability (2015)
Working Paper: Centralization and Accountability: Theory and Evidence from the Clean Air Act (2013)
Working Paper: Centralization and accountability: Theory and evidence from the Clear Air Act (2013)
Working Paper: Centralization and accountability: theory and evidence from the Clean Air Act (2012)
Working Paper: Centralization and Accountability: Theory and Evidence from the Clean Air Act (2012)
Working Paper: Centralization and Accountability: Theory and Evidence from the Clean Air Act (2012)
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