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Policy Innovation In Federal Systems

Author

Listed:
  • Christos Kotsogiannis

    (University of Exeter)

  • Robert Schwager

    (Georg-August-Universitat Gottingen)

Abstract

Conventional wisdom has it that policy innovation is better promoted in a federal rather than in a unitary system. Recent research, however, has provided theoretical evidence to the contrary: a multi-jurisdictional system is characterized---due to the existence of a horizontal information externality---by under-provision of policy innovation. This paper presents a simple model that introduces political competition for federal office. Under such competition political actors use the innovative policies in order to signal ability to the electorate. In the equilibrium analyzed policy innovation occurs more frequently than in a unitary system. It is thus shown that, once electoral motives are accounted for, the conventional wisdom is validated.

Suggested Citation

  • Christos Kotsogiannis & Robert Schwager, 2005. "Policy Innovation In Federal Systems," Urban/Regional 0504001, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpur:0504001
    Note: Type of Document - pdf; pages: 13
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/urb/papers/0504/0504001.pdf
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    References listed on IDEAS

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    1. Kollman, Ken & Miller, John H & Page, Scott E, 2000. "Decentralization and the Search for Policy Solutions," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 16(1), pages 102-128, April.
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    3. Wallace E. Oates & Wallace E. Oates, 2004. "An Essay on Fiscal Federalism," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 22, pages 384-414, Edward Elgar Publishing.
    4. Walker, Jack L., 1969. "The Diffusion of Innovations among the American States," American Political Science Review, Cambridge University Press, vol. 63(3), pages 880-899, September.
    5. Koleman S. Strumpf, 2002. "Does Government Decentralization Increase Policy Innovation?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(2), pages 207-241, April.
    6. Michael J. Keen & Christos Kotsogiannis, 2002. "Does Federalism Lead to Excessively High Taxes?," American Economic Review, American Economic Association, vol. 92(1), pages 363-370, March.
    7. Robert P. Inman & Daniel L. Rubinfeld, 1997. "Rethinking Federalism," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 43-64, Fall.
    8. Strumpf, Koleman S, 2002. "Does Government Decentralization Increase Policy Innovation?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(2), pages 207-241.
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    Cited by:

    1. 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.
    2. Johannes Rincke, 2005. "Neighborhood Influence and Political Change: Evidence from US School Districts," Public Economics 0511011, University Library of Munich, Germany.
    3. Robert Schwager, 2005. "PISA‐Schock und Hochschulmisere – Hat der deutsche Bildungsföderalismus versagt?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 6(2), pages 189-205, May.

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    More about this item

    Keywords

    Fiscal federalism; policy innovation; policy experimentation.;
    All these keywords.

    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • R59 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Other

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    1. Socio-Economics of Innovation

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