Scandinavian Working Papers in Economics
Umeå Economic Studies,
Umeå University, Department of Economics
No 786: Electoral accountability in a country with two-tiered government
David Granlund ()
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David Granlund: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden
Abstract: In democracies, elections are the primary mechanism for making politicians act in voters' interests, but voters are unable to prevent that some resources are diverted to political rents. With two levels of government, the rents are reduced if voters require higher beneficial public expenditures for reelecting incumbents. Voters can also strengthen their power by holding politicians also liable for decisions made by the other level of government. When the incumbent at one level acts as a Stackelberg leader with respect to the other, there is no risk of this leading to Leviathan policies on the part of the incumbents.
Keywords: moral hazard; separation of powers; Stackelberg; transparency; voting theory
24 pages, First version: November 27, 2009. Revised: June 10, 2010.
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