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Provision of public goods in a federal economy: The role of party politics

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  • Sengupta, Bodhisattva

Abstract

We analyze the role of political parties in the provision of public goods within a federal economy. The public goods are federally funded but locally produced (with costly local revenues), and have interjurisdictional spillover effects. The direction and magnitude of fund flow, which ultimately determine the local provision of public goods, are influenced by the re-election probability of the parties in power at the federal and provincial levels. The prevailing wisdom is that provincial governments, which are ruled by the same political party as that ruling at the federal level, enjoy a higher level of federal transfers. We demonstrate that there exists incentive effect of federal transfer complementing such partisan effects.

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  • Sengupta, Bodhisattva, 2011. "Provision of public goods in a federal economy: The role of party politics," European Journal of Political Economy, Elsevier, vol. 27(1), pages 104-119, March.
  • Handle: RePEc:eee:poleco:v:27:y:2011:i:1:p:104-119
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    Citations

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    Cited by:

    1. Manjhi, Ganesh & Keswani Mehra, Meeta, 2016. "Center-State Political Transfer Cycles in India," MPRA Paper 70784, University Library of Munich, Germany.
    2. Sengupta, Bodhisattva, 2016. "Endogenous Leadership in a Federal Transfer Game," MPRA Paper 71882, University Library of Munich, Germany.
    3. Sengupta, Bodhisatva, 2016. "Endogenous Leadership in a Federal Transfer Game," Working Papers 16/180, National Institute of Public Finance and Policy.
    4. Nithin K, 2015. "The Case of Revenue versus Expenditure Optimization in India," Working Papers 1528, Indian Institute of Foreign Trade.
    5. Bodhisattva Sengupta, 2016. "Endogenous Leadership in a Federal Transfer Game," Working Papers id:11473, eSocialSciences.
    6. Kauder, Björn & Potrafke, Niklas & Reischmann, Markus, 2016. "Do politicians reward core supporters? Evidence from a discretionary grant program," Munich Reprints in Economics 43486, University of Munich, Department of Economics.
    7. Divya Datt & Meeta Keswani Mehra, 2016. "Environmental Policy in a Federation with Special Interest Politics and Inter-Governmental Grants," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 64(4), pages 575-595, August.
    8. Kauder, Björn & Björn, Kauder & Niklas, Potrafke & Markus, Reischmann, 2016. "Do politicians gratify core supporters? Evidence from a discretionary grant program," Annual Conference 2016 (Augsburg): Demographic Change 145509, Verein für Socialpolitik / German Economic Association.
    9. Kauder, Björn & Potrafke, Niklas & Reischmann, Markus, 2016. "Do politicians reward core supporters? Evidence from a discretionary grant program," European Journal of Political Economy, Elsevier, vol. 45(C), pages 39-56.

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