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

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  • Boffa, F.
  • Piolatto, A.
  • Ponzetto, G.A.M.

    (Tilburg University, Center for Economic Research)

Abstract

Abstract: This paper studies fiscal federalism when voter information varies across regions. We develop a model of political agency with heterogeneously informed voters. Rentseeking 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 e¢ ciently 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 environ- mental 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.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2012-033.

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Date of creation: 2012
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Handle: RePEc:dgr:kubcen:2012033

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Web page: http://center.uvt.nl

Related research

Keywords: Political centralization; Government accountability; Imperfect information; Interregional heterogeneity; Elections; Environmental policy; Air pollution;

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Cited by:
  1. Edward L. Glaeser, 2012. "Urban Public Finance," NBER Working Papers 18244, National Bureau of Economic Research, Inc.

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