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Vertical externalities and control of politicians

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  • Matthias Wrede

Abstract

A major role of (repeated) elections is to create incentives for politicians to act in the interests of voters. This paper considers the disciplining role of elections in countries with either one or two levels of government. Simple retrospective voting strategies which are based on cut-off levels with respect to expenditure and tax rates are considered. It is shown that the power of voters is weakened if a second independent level of government is added. However, voters can partially reinforce their power by making politicians not only liable for their own policy, but also for the policy carried out at each other level of government. Copyright Springer-Verlag Berlin Heidelberg 2002

Suggested Citation

  • Matthias Wrede, 2002. "Vertical externalities and control of politicians," Economics of Governance, Springer, vol. 3(2), pages 135-151, July.
    • Handle: RePEc:spr:ecogov:v:3:y:2002:i:2:p:135-151
    DOI: 10.1007/s101010100035
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    Citations

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    Cited by:

    1. Thomas Aronsson & David Granlund, 2017. "Federal subsidization of state expenditure to reduce political budget cycles," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(3), pages 536-545, June.
    2. Matthias Wrede, 2004. "Small States, Large Unitary States and Federations," Public Choice, Springer, vol. 119(1_2), pages 219-240, April.
    3. David Granlund, 2011. "Electoral accountability in a country with two-tiered government," Public Choice, Springer, vol. 148(3), pages 531-546, September.

    More about this item

    Keywords

    Key words: voting theory; separation of powers; vertical fiscal externalities; JEL classification: D7; H0; H7;
    All these keywords.

    JEL classification:

    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • H0 - Public Economics - - General
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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