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

75 Pages Posted: 25 Jun 2013

See all articles by Federico Boffa

Federico Boffa

Università degli Studi di Macerata

Amedeo Piolatto

Autonomous University of Barcelona; Barcelona Economics Institute (IEB); Barcelona Graduate School of Economics (Barcelona GSE)

Giacomo A. M. Ponzetto

CREI - Universitat Pompeu Fabra

Multiple version iconThere are 2 versions of this paper

Date Written: June 2013

Abstract

This paper studies fiscal federalism when regions differ in voters' ability to monitor public officials. We develop a model of political agency in which rent-seeking politicians provide public goods to win support from heterogeneously informed voters. In equilibrium, we find that voter information increases government accountability but displays decreasing returns. Therefore, political centralization reduces aggregate rent extraction when voter information varies across regions. When the central government sets a uniform national policy, each region benefits in inverse proportion to its residents' information. We test this prediction using panel data on pollution and newspaper circulation across the United States. The 1970 Clean Air Act centralized environmental policy at the federal level. Consistent with our theory, we find that less informed states benefited from a faster decrease in pollution after centralization.

Keywords: Air pollution, Elections, Environmental policy, Government accountability, Imperfect information, Interregional heterogeneity, Political centralization

JEL Classification: D72, D82, H41, H73, H77, Q58

Suggested Citation

Boffa, Federico and Piolatto, Amedeo and Ponzetto, Giacomo A. M., Centralization and Accountability: Theory and Evidence from the Clean Air Act (June 2013). CEPR Discussion Paper No. DP9514, Available at SSRN: https://ssrn.com/abstract=2284604

Federico Boffa (Contact Author)

Università degli Studi di Macerata ( email )

Via Angeloni 3
Jesi, Ancona 60035
Italy
+393358218861 (Phone)

Amedeo Piolatto

Autonomous University of Barcelona ( email )

Department of Economics and Economic History
Edifici B - Campus Bellaterra
Barcelona, 08193
Spain

HOME PAGE: http://https://sites.google.com/site/piolatto/

Barcelona Economics Institute (IEB) ( email )

c/ John M. Keynes, 1-11
Barcelona, 08034
Spain

HOME PAGE: http://https://sites.google.com/site/piolatto/

Barcelona Graduate School of Economics (Barcelona GSE) ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

Giacomo A. M. Ponzetto

CREI - Universitat Pompeu Fabra ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain
+34 93 542 2829 (Phone)
+34 93 542 2826 (Fax)

HOME PAGE: http://www.crei.cat/people/ponzetto

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