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Elections and de facto Expenditure Decentralization in Canada

Listed author(s):
  • Mario Jametti
  • Marcelin Joanis

This paper empirically investigates the underlying determinants of expenditure decentralization, based on the predictions of a new political economy model of partial decentralization. The analysis is based on an agency model, in which two levels of government are involved in the provision of a public good and voters are imperfectly informed about each government's contribution to the good, creating a shared accountability problem. Under shared expenditure responsibility, the degree of decentralization is endogenous and depends on the relative political conditions prevailing at each level of government. Consistent with the model's predictions, empirical results from a panel of Canadian provinces show that decentralization in a province increases with the electoral strength of the provincial government and decreases with the electoral strength of the federal government, in addition to being affected significantly by the partisan affiliation of both levels of government. A series of alternative empirical specifications, including an IV regression exploiting campaign spending data, are presented to assess the robustness of these results.

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File URL: http://www.cirano.qc.ca/files/publications/2014s-28.pdf
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Paper provided by CIRANO in its series CIRANO Working Papers with number 2014s-28.

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Length: 34 pages
Date of creation: 01 Apr 2014
Handle: RePEc:cir:cirwor:2014s-28
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  1. Patricia Funk & Christina Gathmann, 2011. "Does Direct Democracy Reduce the Size of Government? New Evidence from Historical Data, 1890–2000," Economic Journal, Royal Economic Society, vol. 121(557), pages 1252-1280, December.
  2. Alberto Alesina & Guido Tabellini, 2007. "Bureaucrats or Politicians? Part I: A Single Policy Task," American Economic Review, American Economic Association, vol. 97(1), pages 169-179, March.
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  4. Alesina, Alberto & Tabellini, Guido, 2008. "Bureaucrats or politicians? Part II: Multiple policy tasks," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 426-447, April.
  5. Sergio Galletta & Mario Jametti, 2012. "How to Tame two Leviathans? Revisiting the Effect of Direct Democracy on Local Public Expenditure," CESifo Working Paper Series 3982, CESifo Group Munich.
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  7. Marcelin Joanis, 2008. "Intertwined Federalism: Accountability Problems under Partial Decentralization," Cahiers de recherche 08-22, Departement d'Economique de l'École de gestion à l'Université de Sherbrooke.
  8. Kessing, Sebastian G., 2010. "Federalism and accountability with distorted election choices," Journal of Urban Economics, Elsevier, vol. 67(2), pages 239-247, March.
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  18. Joanis, Marcelin, 2014. "Shared accountability and partial decentralization in local public good provision," Journal of Development Economics, Elsevier, vol. 107(C), pages 28-37.
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