Fiscal Federalism and Electoral Accountability

We study the efficient allocation of spending and taxation authority in a federation in which federal politicians are exposed to electoral uncertainty. We show that centralization may, but need not, result in a loss of electoral accountability. We identify an important asymmetry between positive and negative externalities and show that centralization may not be efficient in economies with positive externalities even when regions are identical and centralization does not entail a loss of accountability. We also show that decentralization can only Pareto dominate centralization in economies with negative externalities.

• Publication year

  2010

• Venue

  Social Science Research Network

• Publication date

  2010-04-01

• Fields of study

  Economics, Political Science

• Identifiers
  DOI 10.1111/JPET.12179
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

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