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We analyze a model of moral hazard in local public services which could be efficiently managed by officials under local democratic accountability, but not by officials who are appointed by the ruler of a centralized autocracy. The ruler might prefer to retain an official who diverted resources...
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pt. 1. Approaches to fiscal federalism -- pt. 2. Decentralization and development -- pt. 3. Implementing multilevel …
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We present a model where heterogeneous districts choose both whether to experiment and the policies to experiment with. Since districts learn from each other, the first-best requires that policy experiments converge so that innovations are useful also for neighbors. However, the equilibrium...
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We investigate the degree of leeway donors of foreign aid should grant to recipient governments when their preferences over how to implement the aid are different, and both the donor and recipient possess some private information about the most effective policies. Intuitively, our model shows...
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-agent framework, it analyzes two alternative policy-decision schemes — ‘decentralization’ and ‘centralization’ — when ‘knowledge … explaining variation in the degree of decentralization across countries. Within a two-sided incomplete information principal … government levels. It is shown that, depending on which level of policy decision making controls the degree of decentralization …
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example of a "delegation-scheme." Conversely, project aid represents a more "centralized" type of aid. According to the theory …' information is more relevant (centralization). The empirical analysis confirms that the importance of donors' private information …
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