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Fiscal disparity, institutions and asymmetric yardstick competition

Alfa Farah

No 2/2018, CIW Discussion Papers from University of Münster, Center for Interdisciplinary Economics (CIW)

Abstract: Fiscal disparity leads to a yardstick bias, in that incumbents in fiscally-rich jurisdictions can provide more public goods, extract more rents and yet have a higher probability to be reelected. This study further emphasizes disparity among jurisdictions, not only in terms of fiscal resources but also of costs of rent appropriation. In a setting in which jurisdictions with a higher fiscal capacity have lower costs of rent appropriation whilst those with a lower fiscal capacity have higher costs of rent appropriation, the difference in costs of rent appropriation might moderate the bias caused by the fiscal disparity.

Keywords: accountability; rent; fiscal capacity; institutions; yardstick competition (search for similar items in EconPapers)
JEL-codes: H71 H72 H77 D72 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-knm and nep-pbe
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ciwdps:22018

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