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Decentralization and electoral accountability: Incentives, separation and voter welfare

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Author Info
Hindriks, Jean
Lockwood, Ben

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Abstract

This paper provides a systematic analysis of fiscal decentralization on the quality of government by studying jointly its effects on electoral discipline and selection, in a setting where, realistically, voters only have limited information about fiscal policy in other jurisdictions, ruling out yardstick competition. Fiscal centralization reduces the extent of electoral discipline, as a corrupt (rent-seeking) incumbent can target good behavior only at a "minimum winning coalition" of regions (selective rent-diversion) in order to retain office, but thus makes it more profitable for bad incumbents to pool with good ones, thus increasing the probability of electoral discipline occurring at all. Voters tend to prefer centralization when politicians are low quality i.e. more likely to be corruptible. Centralization with uniform taxes can dominate both unconstrained centralization and decentralization, explaining why uniform taxes are so widely observed.

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Publisher Info
Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 25 (2009)
Issue (Month): 3 (September)
Pages: 385-397
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Handle: RePEc:eee:poleco:v:25:y:2009:i:3:p:385-397

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Web page: http://www.elsevier.com/locate/inca/505544

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Keywords: Fiscal federalism Decentralization Elections Accountability;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Hikaru Ogawa & David Wildasin, 2007. "Think Locally, Act Locally: Spillovers, Spillbacks, and Efficient Decentralized Policymaking," Working Papers 2007-06, University of Kentucky, Institute for Federalism and Intergovernmental Relations. [Downloadable!]
    Other versions:
  2. Guillaume Cheikbossian & Nicolas Marceau, 2007. "Why Is Law Enforcement Decentralized?," Cahiers de recherche 0719, CIRPEE. [Downloadable!]
  3. Hindricks, Jean & Lockwood, Ben, 2005. "Decentralization and Electoral Accountability: Incentives, Separation and Voter Welfare," CEPR Discussion Papers 5125, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  4. Christos Kotsogiannis & Robert Schwager, 2006. "Fiscal Equalization and Yardstick Competition," Working Papers 2006-15, University of Kentucky, Institute for Federalism and Intergovernmental Relations. [Downloadable!]
    Other versions:
  5. David Wildasin, 2007. "Pre-Emption: Federal Statutory Intervention in State Taxation," Working Papers 2007-05, University of Kentucky, Institute for Federalism and Intergovernmental Relations. [Downloadable!]
  6. Iwan Barankay & Ben Lockwood, 2006. "Decentralization and the Productive Efficiency of Government: Evidence from Swiss Cantons," IZA Discussion Papers 2477, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  7. Antonis Adam & Manthos D. Delis & Pantelis Kammas, 2008. "Fiscal Decentralization and Public Sector Efficiency: Evidence from OECD Countries," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  8. Akramov, Kamiljon T. & Qureshi, Sarfraz & Birner, Regina & Khan, Bilal Hasan, 2008. "Decentralization, local government elections and voter turnout in Pakistan:," IFPRI discussion papers 754, International Food Policy Research Institute (IFPRI). [Downloadable!]
  9. Robin Boadway & Jean-Francois Tremblay, 2005. "A Theory of Vertical Fiscal Imbalance," Working Papers 2006-04, University of Kentucky, Institute for Federalism and Intergovernmental Relations. [Downloadable!]
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  10. Becchetti Leonardo & Londoño Bedoya David, 2006. "The selection of investment subsidy beneficiaries. An estimate of the differences between national and regional policymakers priorities," Departmental Working Papers 244, Tor Vergata University, CEIS. [Downloadable!]
    Other versions:
  11. Bård Harstad, 2007. "Harmonization and Side Payments in Political Cooperation," American Economic Review, American Economic Association, vol. 97(3), pages 871-889, June. [Downloadable!]
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