Elections and De Facto Expenditure Decentralization in Canada

34 Pages Posted: 3 Jun 2014  

Mario Jametti

University of Lugano

Marcelin Joanis

Center for Interuniversity Research and Analysis on Organization (CIRANO)

Multiple version iconThere are 2 versions of this paper

Date Written: April 2, 2014

Abstract

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.

Keywords: Fiscal decentralization, fiscal federalism, vertical interactions, partial decentralization, elections

JEL Classification: R50, H77, D72

Suggested Citation

Jametti, Mario and Joanis, Marcelin, Elections and De Facto Expenditure Decentralization in Canada (April 2, 2014). CIRANO - Scientific Publications 2014s-28. Available at SSRN: https://ssrn.com/abstract=2444978 or http://dx.doi.org/10.2139/ssrn.2444978

Mario Jametti

University of Lugano ( email )

Via Sole 14
CH-6904 Lugano, Ticino 6900
Switzerland
+41 58 666 4269 (Phone)

HOME PAGE: http://www.people.lu.unisi.ch/jamettim/

Marcelin Joanis (Contact Author)

Center for Interuniversity Research and Analysis on Organization (CIRANO) ( email )

2020 rue University, 25th floor
Montreal H3A 2A5, Quebec
Canada

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