POLICY INNOVATION IN FEDERAL SYSTEMS

Christos Kotsogiannis and Robert Schwager
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Robert Schwager: Georg-August-Universitat Gottingen

Urban/Regional from University Library of Munich, Germany

Abstract: Conventional wisdom has it that policy innovation is better promoted in a federal rather than in a unitary system. Recent research, however, has provided theoretical evidence to the contrary: a multi-jurisdictional system is characterized---due to the existence of a horizontal information externality---by under-provision of policy innovation. This paper presents a simple model that introduces political competition for federal office. Under such competition political actors use the innovative policies in order to signal ability to the electorate. In the equilibrium analyzed policy innovation occurs more frequently than in a unitary system. It is thus shown that, once electoral motives are accounted for, the conventional wisdom is validated.

Keywords: Fiscal federalism; policy innovation; policy experimentation. (search for similar items in EconPapers)
JEL-codes: H77 R59 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2005-04-04
New Economics Papers: this item is included in nep-geo, nep-pol and nep-tid
Note: Type of Document - pdf; pages: 13
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpur:0504001

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