Centralization and Accountability: Theory and Evidence from the Clean Air Act

F. Boffa, A. Piolatto, G.A.M. Ponzetto

Research output: Working paperDiscussion paperOther research output

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Abstract

Abstract: This paper studies fiscal federalism when voter information varies across regions. We develop a model of political agency with heterogeneously informed voters. Rentseeking politicians provide public goods to win the votes of the informed. As a result, rent extraction is lower in regions with higher information. In equilibrium, electoral discipline has decreasing returns. Thus, political centralization e¢ ciently reduces aggregate rent extraction. The model predicts that a region's benefits from centralization are decreasing in its residents' information. We test this prediction using panel data on pollutant emissions across U.S. states. The 1970 Clean Air Act centralized environ- mental policy at the federal level. In line with our theory, we find that centralization induced a differential decrease in pollution for uninformed relative to informed states.
Original languageEnglish
Place of PublicationTilburg
PublisherEconomics
Number of pages50
Volume2012-033
Publication statusPublished - 2012

Publication series

NameCentER Discussion Paper
Volume2012-033

Fingerprint

Centralization
Clean Air Act
Accountability
Rent extraction
Vote
Prediction
Politicians
Fiscal federalism
U.S. States
Pollution
Rent-seeking
Residents
Political agency
Panel data
Voters

Keywords

  • Political centralization
  • Government accountability
  • Imperfect information
  • Interregional heterogeneity
  • Elections
  • Environmental policy
  • Air pollution

Cite this

Boffa, F., Piolatto, A., & Ponzetto, G. A. M. (2012). Centralization and Accountability: Theory and Evidence from the Clean Air Act. (CentER Discussion Paper; Vol. 2012-033). Tilburg: Economics.
Boffa, F. ; Piolatto, A. ; Ponzetto, G.A.M. / Centralization and Accountability : Theory and Evidence from the Clean Air Act. Tilburg : Economics, 2012. (CentER Discussion Paper).
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Boffa, F, Piolatto, A & Ponzetto, GAM 2012 'Centralization and Accountability: Theory and Evidence from the Clean Air Act' CentER Discussion Paper, vol. 2012-033, Economics, Tilburg.

Centralization and Accountability : Theory and Evidence from the Clean Air Act. / Boffa, F.; Piolatto, A.; Ponzetto, G.A.M.

Tilburg : Economics, 2012. (CentER Discussion Paper; Vol. 2012-033).

Research output: Working paperDiscussion paperOther research output

TY - UNPB

T1 - Centralization and Accountability

T2 - Theory and Evidence from the Clean Air Act

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AU - Piolatto, A.

AU - Ponzetto, G.A.M.

N1 - Pagination: 50

PY - 2012

Y1 - 2012

N2 - Abstract: This paper studies fiscal federalism when voter information varies across regions. We develop a model of political agency with heterogeneously informed voters. Rentseeking politicians provide public goods to win the votes of the informed. As a result, rent extraction is lower in regions with higher information. In equilibrium, electoral discipline has decreasing returns. Thus, political centralization e¢ ciently reduces aggregate rent extraction. The model predicts that a region's benefits from centralization are decreasing in its residents' information. We test this prediction using panel data on pollutant emissions across U.S. states. The 1970 Clean Air Act centralized environ- mental policy at the federal level. In line with our theory, we find that centralization induced a differential decrease in pollution for uninformed relative to informed states.

AB - Abstract: This paper studies fiscal federalism when voter information varies across regions. We develop a model of political agency with heterogeneously informed voters. Rentseeking politicians provide public goods to win the votes of the informed. As a result, rent extraction is lower in regions with higher information. In equilibrium, electoral discipline has decreasing returns. Thus, political centralization e¢ ciently reduces aggregate rent extraction. The model predicts that a region's benefits from centralization are decreasing in its residents' information. We test this prediction using panel data on pollutant emissions across U.S. states. The 1970 Clean Air Act centralized environ- mental policy at the federal level. In line with our theory, we find that centralization induced a differential decrease in pollution for uninformed relative to informed states.

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KW - Government accountability

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KW - Interregional heterogeneity

KW - Elections

KW - Environmental policy

KW - Air pollution

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VL - 2012-033

T3 - CentER Discussion Paper

BT - Centralization and Accountability

PB - Economics

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ER -

Boffa F, Piolatto A, Ponzetto GAM. Centralization and Accountability: Theory and Evidence from the Clean Air Act. Tilburg: Economics. 2012. (CentER Discussion Paper).