Pork-Barrel Politics, Targetable Policies, and Fiscal Federalism
This article utilizes a simple model of redistributive politics with jurisdictional specific local projects to analyze the inefficiencies that arise under differing levels of targetability in both taxes/transfers and local projects. The ability to tactically target taxes/transfers and/or local projects leads political parties to engage in pandering to favored groups. However, in equilibrium, we find that greater targetability in the set of available policies actually intensifies the competition between the political parties and so increases efficiency in the provision of local projects. (JEL: D72, H41) (c) 2008 by the European Economic Association.
Volume (Year): 6 (2008)
Issue (Month): 4 (06)
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