Political Centralization and Government Accountability
AbstractThis paper studies fiscal federalism when regions differ in voters' ability to monitor public officials. We develop a model of political agency in which rent-seeking politicians provide public goods to win support from heterogeneously informed voters. In equilibrium, we find that voter information increases government accountability but displays decreasing returns. Therefore, political centralization reduces aggregate rent extraction when voter information varies across regions. When the central government sets a uniform national policy, each region benefits in inverse proportion to its residents' ’information. We test this prediction using panel data on pollution and newspaper circulation across the United States. The 1970 Clean Air Act centralized environmental policy at the federal level. Consistent with our theory, we find that less informed states benefited from a faster decrease in pollution after centralization.
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Bibliographic InfoPaper provided by Barcelona Graduate School of Economics in its series Working Papers with number 656.
Date of creation: May 2014
Date of revision:
political centralization; government accountability; imperfect information; interregional heterogeneity; elections; environmental policy; air pollution;
Other versions of this item:
- Federico Boffa & Amedeo Piolatto & Giacomo A. M. Ponzetto, 2011. "Political centralization and government accountability," Economics Working Papers 1335, Department of Economics and Business, Universitat Pompeu Fabra, revised May 2014.
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-30 (All new papers)
- NEP-CDM-2012-09-30 (Collective Decision-Making)
- NEP-CTA-2012-09-30 (Contract Theory & Applications)
- NEP-ENE-2012-09-30 (Energy Economics)
- NEP-ENV-2012-09-30 (Environmental Economics)
- NEP-POL-2012-09-30 (Positive Political Economics)
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