Bulletin n. 1/2017
June 2017
  • Section A) The theory and practise of the federal states and multi-level systems of government
  • Section B) Global governance and international organizations
  • Section C) Regional integration processes
  • Section D) Federalism as a political idea
  • Toke S. Aidt, Jayasri Dutta
    Fiscal Federalism and Electoral Accountability
    in Journal of Public Economic Theory , Volume 19, Issue 1 ,  2017 ,  38-58
    We evaluate how governance uncertainty—exemplified by turnout uncertainty—affects the trade-off between internalization of externalities and political accountability in the design of the fiscal state. We show that centralization only weakens political accountability in the presence of negative externalities. Unlike positive externalities, negative externalities allow federal politicians to extract higher rents. This yields two new insights. First, decentralization can only Pareto dominate centralization in economies with negative externalities. Second, centralization may not be Pareto efficient in economies with positive externalities despite the fact that policy can be tailored to regional taste differences and centralization internalizes the positive externality.
    ©2001 - 2012 - Centro Studi sul Federalismo - P. IVA 94067130016