A Theory of Menu Federalism: Decentralization by Political Agreement

35 Pages Posted: 26 May 2006  

Andreas P. Kyriacou

University of Girona - Department of Economics

Jordi Bacaria

Autonomous University of Barcelona - Department d'Economia Aplicada

Roger D. Congleton

West Virginia University - Department of Economics; George Mason University - Center for Study of Public Choice

Abstract

This paper analyzes agreements between governments that determine the division of policy-making power between central and regional governments. Our analysis demonstrates that initial circumstances and political risks affect the degree of centralization that will be adopted, and that asymmetric forms of federalism are often consequences of ongoing negotiations between regional and central governments over the assignment of policy-making authority. We analyze three settings where gains from constitutional exchange may exist: (i) the under-centralized state, (ii) the over-centralized state, and (iii) the constitutional convention. In each case, an asymmetric form of federalism is the predicted outcome, although the degree of asymmetry differs according to starting point. Modern and historical examples are used to illustrate the relevance of our analysis.

Keywords: Menu Federalism, Asymmetric Federalism, Endogenous Decentralization, Federalism, Constitutional Exchange, Constitutional Evolution

JEL Classification: H1, H7, D7

Suggested Citation

Kyriacou, Andreas P. and Bacaria, Jordi and Congleton, Roger D., A Theory of Menu Federalism: Decentralization by Political Agreement. Constitutional Political Economy, Vol. 14, pp. 167-190, 2003. Available at SSRN: https://ssrn.com/abstract=904624

Andreas P. Kyriacou

University of Girona - Department of Economics ( email )

Campus de Montilivi
Girona, Girona 17071
Spain
972 418716 (Phone)
972 418032 (Fax)

Jordi Bacaria

Autonomous University of Barcelona - Department d'Economia Aplicada ( email )

Plaça Cívica
Cerdañola del Valles
Barcelona, Barcelona 08193
Spain

HOME PAGE: http://www.ecap.uab.es/

Roger D. Congleton (Contact Author)

West Virginia University - Department of Economics ( email )

PO Box 6025
Morgantown, WV 26506
United States

HOME PAGE: http://rdc1.net

George Mason University - Center for Study of Public Choice ( email )

4400 University Drive
Fairfax, VA 22030
United States

HOME PAGE: http://rdc1.net

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