RT Generic
T1 Fiscal centralization and the political process
A1 Albornoz, Facundo
A1 Cabrales, Antonio
A2 Universidad Carlos III de Madrid. Departamento de Economía, 
AB We study the dynamic support for fiscal decentralization in a political agencymodel from the perspective of a region. We show that corruption opportunitiesare lower under centralization at each period of time. However, centralizationmakes more difficult for citizens to detect corrupt incumbents. Thus, corruptionis easier under centralization for low levels of political competition. We showthat the relative advantage of centralization depends negatively on the quality ofthe local political class, but it is greater if the center and the region are subjectto similar government productivity shocks. When we endogenize the quality oflocal politicians, we establish a positive link between the development of theprivate sector and the support for decentralization. Since political support tocentralization evolves over time, driven either by economic/politicaldevelopment or by exogenous changes in preferences over public goodconsumption, it is possible that voters are (rationally) discontent about it. Also,preferences of voters and the politicians about centralization can diverge whenpolitical competition is weak.
SN 2340-5031
YR 2010
FD 2010-01
LK https://hdl.handle.net/10016/6673
UL https://hdl.handle.net/10016/6673
LA eng
DS e-Archivo
RD 3 may. 2024