IDEAS home Printed from https://ideas.repec.org/p/anc/wmofir/146.html
   My bibliography  Save this paper

The closer the better? Institutional distance and information blurring in a political agency model

Author

Listed:
  • David Bartolini

    () (OECD)

  • Agnese Sacchi

    () (Sapienza University of Rome (Italy); GEN (Spain))

  • Domenico Scalera

    () (University of Sannio (Italy))

  • Alberto Zazzaro

    () (University of Naples Federico II; CSEF & MoFiR (Italy))

Abstract

Government accountability increases with voters' proximity to policy-makers. Decentralization reforms implemented in many countries in the last twenty years are based on this principle. We present a political agency model that challenges this view and shows that the effects of increasing proximity may depend on the institutional context. In particular, the presence of rent-seeking politicians and heterogeneity in voters' political awareness produce three distinct optimal levels of decentralization. Furthermore, optimal distance depends on the capacity of rent-seeking incumbents to blur information available to voters. When the incumbent reacts to increasing proximity with more blurring activity, the optimal distance increases. Accordingly, less decentralization is preferable.

Suggested Citation

  • David Bartolini & Agnese Sacchi & Domenico Scalera & Alberto Zazzaro, 2018. "The closer the better? Institutional distance and information blurring in a political agency model," Mo.Fi.R. Working Papers 146, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
  • Handle: RePEc:anc:wmofir:146
    as

    Download full text from publisher

    File URL: http://docs.dises.univpm.it/web/quaderni/pdfmofir/Mofir146.pdf
    File Function: First version, 2018
    Download Restriction: no

    References listed on IDEAS

    as
    1. Besley, Timothy & Case, Anne, 1995. "Incumbent Behavior: Vote-Seeking, Tax-Setting, and Yardstick Competition," American Economic Review, American Economic Association, vol. 85(1), pages 25-45, March.
    2. G. Gulsun Arikan, 2004. "Fiscal Decentralization: A Remedy for Corruption?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 11(2), pages 175-195, March.
    3. Agnese Sacchi & Simone Salotti, 2016. "A Comprehensive Analysis of Expenditure Decentralization and of the Composition of Local Public Spending," Regional Studies, Taylor & Francis Journals, vol. 50(1), pages 93-109, January.
    4. Ugo Troiano & Giacomo Ponzetto, 2012. "Social Capital, Government Expenditures, and Growth," 2012 Meeting Papers 1048, Society for Economic Dynamics.
    5. Ivanyna, Maksym & Shah, Anwar, 2014. "How close is your government to its people? Worldwide indicators on localization and decentralization," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 8, pages 1-61.
    6. Robert C. Feenstra & Robert Inklaar & Marcel P. Timmer, 2015. "The Next Generation of the Penn World Table," American Economic Review, American Economic Association, vol. 105(10), pages 3150-3182, October.
    7. Torsten Persson & Gérard Roland & Guido Tabellini, 1997. "Separation of Powers and Political Accountability," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1163-1202.
    8. Lorenz Blume & Stefan Voigt, 2011. "Federalism and decentralization—a critical survey of frequently used indicators," Constitutional Political Economy, Springer, vol. 22(3), pages 238-264, September.
    9. Goel, Rajeev K. & Mazhar, Ummad & Nelson, Michael A. & Ram, Rati, 2017. "Different forms of decentralization and their impact on government performance: Micro-level evidence from 113 countries," Economic Modelling, Elsevier, vol. 62(C), pages 171-183.
    10. Christian Bruns & Oliver Himmler, 2010. "Media activity and public spending," Economics of Governance, Springer, vol. 11(4), pages 309-332, November.
    11. Francesco Porcelli, 2014. "Electoral accountability and local government efficiency: quasi-experimental evidence from the Italian health care sector reforms," Economics of Governance, Springer, vol. 15(3), pages 221-251, August.
    12. Hindriks, Jean & Lockwood, Ben, 2009. "Decentralization and electoral accountability: Incentives, separation and voter welfare," European Journal of Political Economy, Elsevier, vol. 25(3), pages 385-397, September.
    13. Federico Boffa & Amedeo Piolatto & Giacomo A. M. Ponzetto, 2016. "Political Centralization and Government Accountability," The Quarterly Journal of Economics, Oxford University Press, vol. 131(1), pages 381-422.
    14. Stefan Voigt & Lorenz Blume, 2012. "The economic effects of federalism and decentralization—a cross-country assessment," Public Choice, Springer, vol. 151(1), pages 229-254, April.
    15. Giovanni Maggi & Andres Rodriguez-Clare, 1995. "Costly Distortion of Information in Agency Problems," RAND Journal of Economics, The RAND Corporation, vol. 26(4), pages 675-689, Winter.
    16. Enikolopov, Ruben & Zhuravskaya, Ekaterina, 2007. "Decentralization and political institutions," Journal of Public Economics, Elsevier, vol. 91(11-12), pages 2261-2290, December.
    17. repec:dgr:kubcen:2012033 is not listed on IDEAS
    18. Fisman, Raymond & Gatti, Roberta, 2002. "Decentralization and corruption: evidence across countries," Journal of Public Economics, Elsevier, vol. 83(3), pages 325-345, March.
    19. Daniele, Gianmarco & Dipoppa, Gemma, 2017. "Mafia, elections and violence against politicians," Journal of Public Economics, Elsevier, vol. 154(C), pages 10-33.
    20. Ligthart, Jenny E. & van Oudheusden, Peter, 2015. "In government we trust: The role of fiscal decentralization," European Journal of Political Economy, Elsevier, vol. 37(C), pages 116-128.
    21. Nicola Gennaioli & Ilia Rainer, 2007. "The modern impact of precolonial centralization in Africa," Journal of Economic Growth, Springer, vol. 12(3), pages 185-234, September.
    22. David Prieto & Santiago Lago-Peñas, 2012. "Decomposing the determinants of health care expenditure: the case of Spain," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 13(1), pages 19-27, February.
    23. Oto-Peralías, Daniel & Romero-Ávila, Diego & Usabiaga, Carlos, 2013. "Does fiscal decentralization mitigate the adverse effects of corruption on public deficits?," European Journal of Political Economy, Elsevier, vol. 32(C), pages 205-231.
    24. Shelton, Cameron A., 2007. "The size and composition of government expenditure," Journal of Public Economics, Elsevier, vol. 91(11-12), pages 2230-2260, December.
    25. Shi, Min & Svensson, Jakob, 2006. "Political budget cycles: Do they differ across countries and why?," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1367-1389, September.
    26. Sergio Beraldo & Massimo Bordignon & Simone Pellegrino & Massimiliano Piacenza & Gilberto Turati, 2017. "Fiscally Responsible Mafia-clans," Working papers 043, Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
    27. Smart, Michael & Sturm, Daniel M., 2013. "Term limits and electoral accountability," Journal of Public Economics, Elsevier, vol. 107(C), pages 93-102.
    28. repec:aea:aejmic:v:9:y:2017:i:2:p:95-138 is not listed on IDEAS
    29. Timothy Besley & Andrea Prat, 2006. "Handcuffs for the Grabbing Hand? Media Capture and Government Accountability," American Economic Review, American Economic Association, vol. 96(3), pages 720-736, June.
    30. Besley, Timothy & Coate, Stephen, 2003. "Centralized versus decentralized provision of local public goods: a political economy approach," Journal of Public Economics, Elsevier, vol. 87(12), pages 2611-2637, December.
    31. Fan, C. Simon & Lin, Chen & Treisman, Daniel, 2009. "Political decentralization and corruption: Evidence from around the world," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 14-34, February.
    32. Matthew Gentzkow, 2006. "Television and Voter Turnout," The Quarterly Journal of Economics, Oxford University Press, vol. 121(3), pages 931-972.
    33. Rafael Di Tella & Ignacio Franceschelli, 2011. "Government Advertising and Media Coverage of Corruption Scandals," American Economic Journal: Applied Economics, American Economic Association, vol. 3(4), pages 119-151, October.
    34. Rajeev Goel & Michael Nelson, 2011. "Government fragmentation versus fiscal decentralization and corruption," Public Choice, Springer, vol. 148(3), pages 471-490, September.
    35. Federico Boffa & Amedeo Piolatto & Giacomo A. M. Ponzetto, 2012. "Centralization and Accountability: Theory and Evidence from the Clean Air Act," CERIS Working Paper 201213, Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY -NOW- Research Institute on Sustainable Economic Growth - Moncalieri (TO) ITALY.
    36. Michael Nelson, 1986. "An empirical analysis of state and local tax structure in the context of the Leviathan model of government," Public Choice, Springer, vol. 49(3), pages 283-294, January.
    37. Antonis Adam & Manthos Delis & Pantelis Kammas, 2014. "Fiscal decentralization and public sector efficiency: evidence from OECD countries," Economics of Governance, Springer, vol. 15(1), pages 17-49, February.
    38. Lupia, Arthur, 1994. "The Effect of Information on Voting Behavior and Electoral Outcomes: An Experimental Study of Direct Legislation," Public Choice, Springer, vol. 78(1), pages 65-86, January.
    39. James M. Snyder & David Strömberg, 2010. "Press Coverage and Political Accountability," Journal of Political Economy, University of Chicago Press, vol. 118(2), pages 355-408, April.
    40. Pranab Bardhan, 2002. "Decentralization of Governance and Development," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 185-205, Fall.
    41. Jiménez-Rubio, Dolores, 2011. "The impact of fiscal decentralization on infant mortality rates: Evidence from OECD countries," Social Science & Medicine, Elsevier, vol. 73(9), pages 1401-1407.
    42. Pranab Bardhan & Dilip Mookherjee, 2006. "Decentralization, Corruption and Government Accountability," Chapters,in: International Handbook on the Economics of Corruption, chapter 6 Edward Elgar Publishing.
    43. Dilip Mookherjee & Pranab K. Bardhan, 2000. "Capture and Governance at Local and National Levels," American Economic Review, American Economic Association, vol. 90(2), pages 135-139, May.
    44. Weingast, Barry R., 2009. "Second generation fiscal federalism: The implications of fiscal incentives," Journal of Urban Economics, Elsevier, vol. 65(3), pages 279-293, May.
    45. Nadir Habibi & Cindy Huang & Diego Miranda & Victoria Murillo & Gustav Ranis & Mainak Sarkar & Frances Stewart, 2003. "Decentralization and Human Development in Argentina," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 4(1), pages 73-101.
    46. Pranab Bardhan & Dilip Mookherjee, 2006. "Decentralisation and Accountability in Infrastructure Delivery in Developing Countries," Economic Journal, Royal Economic Society, vol. 116(508), pages 101-127, January.
    47. Seabright, Paul, 1996. "Accountability and decentralisation in government: An incomplete contracts model," European Economic Review, Elsevier, vol. 40(1), pages 61-89, January.
    48. Dolores Jimenez Rubio, 2011. "The impact of decentralization of health services on health outcomes: evidence from Canada," Applied Economics, Taylor & Francis Journals, vol. 43(26), pages 3907-3917.
    49. David Strömberg, 2004. "Radio's Impact on Public Spending," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 189-221.
    50. Robert Barro, 1973. "The control of politicians: An economic model," Public Choice, Springer, vol. 14(1), pages 19-42, March.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    government accountability; information; institutional distance; rent-seeking; political awareness;

    JEL classification:

    • 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
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • H40 - Public Economics - - Publicly Provided Goods - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:anc:wmofir:146. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Maurizio Mariotti). General contact details of provider: http://edirc.repec.org/data/mfancit.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.