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Political Accountability and Fiscal Federalism

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  • Santanu Gupta

Abstract

In a model with democratic institutions and three jurisdictions, we study the allocation and welfare in a one-level (unitary) and a two-level (federal) government, given that the central government finds it optimal to discriminate in favor of two jurisdictions and against the third. Favored jurisdictions are at least as well off in a unitary structure as compared to a federal one, while this may not be so for the jurisdiction discriminated against. We finally show that jurisdiction-specific electoral uncertainty is consistent with both equitable as well as discriminating allocations. Copyright Kluwer Academic Publishers 2001

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  • Santanu Gupta, 2001. "Political Accountability and Fiscal Federalism," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 8(3), pages 263-280, May.
    • Handle: RePEc:kap:itaxpf:v:8:y:2001:i:3:p:263-280
    DOI: 10.1023/A:1011212106226
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    References listed on IDEAS

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    1. Roger H. Gordon, 1983. "An Optimal Taxation Approach to Fiscal Federalism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(4), pages 567-586.
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    3. Dixit, Avinash & Londregan, John, 1998. "Fiscal federalism and redistributive politics," Journal of Public Economics, Elsevier, vol. 68(2), pages 153-180, May.
    4. Robin Boadway & Michael Keen, 1996. "Efficiency and the optimal direction of federal-state transfers," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 3(2), pages 137-155, May.
    5. Snyder, James M, 1989. "Election Goals and the Allocation of Campaign Resources," Econometrica, Econometric Society, vol. 57(3), pages 637-660, May.
    6. Coughlin, Peter J & Mueller, Dennis C & Murrell, Peter, 1990. "Electoral Politics, Interest Groups, and the Size of Government," Economic Inquiry, Western Economic Association International, vol. 28(4), pages 682-705, October.
    7. Seabright, Paul, 1996. "Accountability and decentralisation in government: An incomplete contracts model," European Economic Review, Elsevier, vol. 40(1), pages 61-89, January.
    8. Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(3), pages 371-400.
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    Cited by:

    1. Santanu Gupta & Raghbendra Jha, 2016. "Democracy and redistribution," Departmental Working Papers 2016-02, The Australian National University, Arndt-Corden Department of Economics.
    2. Santanu Gupta & Raghbendra Jha, 2006. "Local public goods in a democracy: Theory and evidence from rural India," Departmental Working Papers 2006-07, The Australian National University, Arndt-Corden Department of Economics.
    3. Santanu Gupta & Raghbendra Jha, 2016. "Democracy, redistribution and optimal tax structures," Departmental Working Papers 2016-13, The Australian National University, Arndt-Corden Department of Economics.
    4. Krishnan C, Muralee & Gupta, Santanu, 2018. "Political pricing of electricity – Can it go with universal service provision?," Energy Policy, Elsevier, vol. 116(C), pages 373-381.
    5. Santhanu Gupta, 2007. "On the Relevance of the Median Voter to Resource Allocation amongst Jurisdictions," Working Papers id:1145, eSocialSciences.

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