On the Incentives to Experiment in Federations

Conventional wisdom has it that policy innovation is better promoted in a federal rather than in a unitary system. Recent research, however, has provided theoretical evidence to the contrary: a multi-jurisdictional system is characterized - due to the existence of a horizontal information externality - by under-provision of policy innovation. This paper presents a simple model that introduces political competition for federal office. Under such competition political actors use the innovative policies in order to signal ability to the electorate. In the equilibrium analyzed policy innovation may occur more frequently than in a unitary system. It is thus shown that, once electoral motives are accounted for, the conventional wisdom is likely to be a valid proposition.

[1]  Paul de Bijl.  Structural Separation and Access in Telecommunications Markets , 2004 .

[2]  Antonis Adam,et al.  Turkish Delight for Some, Cold Turkey for Others?: The Effects of the Eu-Turkey Customs Union , 2005, SSRN Electronic Journal.

[3]  T. Andersen.  Social Security and Longevity , 2005, SSRN Electronic Journal.

[4]  Jack L. Walker.  The Diffusion of Innovations among the American States , 1969, American Political Science Review.

[5]  M. Funke,et al.  Drifting together or falling apart? The empirics of regional economic growth in post-unification Germany , 2005, SSRN Electronic Journal.

[6]  Til Schuermann,et al.  Firm Heterogeneity and Credit Risk Diversification , 2005, SSRN Electronic Journal.

[7]  Marc Schramm,et al.  Putting New Economic Geography to the Test: Free-Ness of Trade and Agglomeration in the EU Regions , 2005, SSRN Electronic Journal.

[8]  A. Glazer,et al.  Subsidizing Enjoyable Education , 2005, SSRN Electronic Journal.

[9]  K. Holden,et al.  Assessing the maintenance of savings sufficiency over the first decade of retirement , 2005, SSRN Electronic Journal.

[10]  Marc Schramm,et al.  Looking for Multiple Equilibria When Geography Matters: German City Growth and the Wwii Shock , 2005, SSRN Electronic Journal.

[11]  S. Rose-Ackerman.  Risk Taking and Reelection: Does Federalism Promote Innovation? , 1980, The Journal of Legal Studies.

[12]  Jakob de Haan,et al.  Trade and Business Cycle Synchronization in OECD Countries: A Re-Examination , 2005, SSRN Electronic Journal.

[13]  R. Disney.  Household Saving Rates and the Design of Social Security Programmes: Evidence from a Country Panel , 2005, SSRN Electronic Journal.

[14]  Wolfgang Ochel,et al.  Contracting Out Temporary Help Services in Germany , 2005, SSRN Electronic Journal.

[15]  Kai A. Konrad,et al.  Succession Rules and Leadership Rents , 2005, SSRN Electronic Journal.

[16]  Jovan Žamac,et al.  Pension Design When Fertility Fluctuates: The Role of Capital Mobility and Education Financing , 2005, SSRN Electronic Journal.

[17]  Wolfgang Buchholz,et al.  Constant Savings Rates and Quasi-Arithmetic Population Growth Under Exhaustible Resource Constraints , 2005, SSRN Electronic Journal.

[18]  Jörg Breitung,et al.  Unit Roots and Cointegration in Panels , 2005, SSRN Electronic Journal.

[19]  Piotr Wdowinski,et al.  The Warsaw Stock Exchange Index Wig: Modelling and Forecasting , 2005, SSRN Electronic Journal.

[20]  Vincenzo Galasso,et al.  Early Retirement and Social Security: A Long-Term Perspective , 2005, SSRN Electronic Journal.

[21]  M. Gérard.  Multijurisdictional Firms and Governments' Strategies Under Alternative Tax Designs , 2005, SSRN Electronic Journal.

[22]  Christian Habermann,et al.  Risk Sharing and Efficiency Implications of Progressive Pension Arrangements , 2005, SSRN Electronic Journal.

[23]  Piotr Wdowinski,et al.  Financial Markets and Economic Growth in Poland: Simulations with an Econometric Model , 2005, Social Science Research Network.

[24]  Sascha O. Becker.  Introducing Time-to-Educate in a Job-Search Model , 2005 .

[25]  P. Sørensen.  Dual Income Taxation: Why and How? , 2005, SSRN Electronic Journal.

[26]  J. Binswanger.  Risk management of pensions from the perspective of loss aversion , 2007 .

[27]  Koleman S. Strumpf,et al.  Does Government Decentralization Increase Policy Innovation? , 1999 .

[28]  J. de Haan,et al.  Has the Stability and Growth Pact Impeded Political Budget Cycles in the European Union? , 2005, SSRN Electronic Journal.

[29]  Peter A. Zadrozny,et al.  Estimated U.S. Manufacturing Production Capital and Technology Based on an Estimated Dynamic Economic Model , 2005, SSRN Electronic Journal.

[30]  L. Danziger.  Output Effects of Inflation with Fixed Price- and Quantity-Adjustment Costs , 2005, SSRN Electronic Journal.

[31]  O. Straume,et al.  Can Deunionization Lead to International Outsourcing? , 2005, SSRN Electronic Journal.

[32]  Kurt R. Brekke,et al.  Gatekeeping in Health Care , 2005, Journal of health economics.

[33]  Paul De Grauwe,et al.  Non-Linearities in the Relation between the Exchange Rate and its Fundamentals , 2005, SSRN Electronic Journal.

[34]  G. Glomm,et al.  Public Pensions and Capital Accumulation: The Case of Brazil , 2005, SSRN Electronic Journal.

[35]  H. Gersbach,et al.  Self-Financing Environmental Mechanisms , 2005, SSRN Electronic Journal.

[36]  Volker Nitsch.  State Visits and International Trade , 2005, SSRN Electronic Journal.

[37]  Christos Kotsogiannis,et al.  Political Uncertainty and Policy Innovation , 2006 .

[38]  Michael Pfaffermayr,et al.  Small Sample Properties of Maximum Likelihood Versus Generalized Method of Moments Based Tests for Spatially Autocorrelated Errors , 2005, SSRN Electronic Journal.

[39]  M. Keen,et al.  Does Federalism Lead to Excessively High Taxes , 2002 .

[40]  Robert J. Gary-Bobo,et al.  Sharing Budgetary Austerity Under Free Mobility and Asymmetric Information: An Optimal Regulation Approach to Fiscal Federalism , 2005, SSRN Electronic Journal.

[41]  Panu Poutvaara.  Social Security Incentives, Human Capital Investment and Mobility of Labor , 2005, SSRN Electronic Journal.

[42]  A. Sousa-Poza,et al.  Early Retirement: Free Choice or Forced Decision? , 2005, SSRN Electronic Journal.

[43]  Neighborhood Influence and Political Change: Evidence from US School Districts , 2005 .

[44]  Dan Kovenock,et al.  Equilibrium and efficiency in the tug-of-war , 2019 .

[45]  W. Peters,et al.  Justifying the Lindahl solution as an outcome of fair cooperation , 2005, SSRN Electronic Journal.

[46]  R. MacDonald,et al.  Trade Costs, Trade Balances and Current Accounts: An Application of Gravity to Multilateral Trade , 2005, SSRN Electronic Journal.

[47]  Volker Grossmann,et al.  Distribution of Natural Resources, Entrepreneurship, and Economic Development: Growth Dynamics with Two Elites , 2005, SSRN Electronic Journal.

[48]  Yu-Fu Chen,et al.  Product Market Competition, Investment and Employment-Abundant Versus Job-Poor Growth: A Real Options Perspective , 2005, SSRN Electronic Journal.

[49]  Johannes Rincke.  Competition in the public school sector: Evidence on strategic interaction among US school districts , 2006 .

[50]  R. Pethig,et al.  Nonlinear Production, Abatement, Pollution and Materials Balance Reconsidered , 2005, SSRN Electronic Journal.

[51]  John H. Miller,et al.  Decentralization and the Search for Policy Solutions , 2000 .

[52]  Stefan C. Wolter,et al.  Demographic Change and Public Education Spending: A Conflict between Young and Old? , 2005, SSRN Electronic Journal.

[53]  Norbert Klusen,et al.  Social Health Insurance - the Major Driver of Unsustainable Fiscal Policy? , 2005, SSRN Electronic Journal.

[54]  H. Verbon,et al.  The international spillover effects of pension reform , 2005, SSRN Electronic Journal.

[55]  Kurt Schmidheiny,et al.  How Fiscal Decentralization Flattens Progressive Taxes , 2005, SSRN Electronic Journal.

[56]  T. Eichner,et al.  A MICRO‐LEVEL ‘CONSUMER APPROACH’ TO SPECIES POPULATION DYNAMICS , 2005, SSRN Electronic Journal.

[57]  Kai A. Konrad,et al.  The market for protection and the origin of the state , 2005, SSRN Electronic Journal.

[58]  A. Kemnitz.  Can Immigrant Employment Alleviate the Demographic Burden? The Role of Union Centralization , 2005, SSRN Electronic Journal.

[59]  Astri Muren,et al.  Young Liberals and Old Conservatives - Inequality, Mobility and Redistribution , 2005, SSRN Electronic Journal.

[60]  T. Besley.  Political Institutions and Policy Competition , 2005 .

[61]  R. Filer,et al.  Endogenous Pensions and Retirement Behavior , 2005, SSRN Electronic Journal.

[62]  A. Glazer,et al.  The Desire for Impact , 2005, SSRN Electronic Journal.

[63]  W. Oates,et al.  An Essay on Fiscal Federalism , 1999 .

[64]  Annalisa Luporini,et al.  Ownership Concentration, Monitoring and Optimal Board Structure , 2005, SSRN Electronic Journal.