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This paper assesses the extent to which party systems are nationalized in four federations. In doing so, the research addresses two questions. First, is dual accountability operational across decentralized countries, or do sub-national voters turn to national cues as a means to economize in a complex information environment? By bringing a cross-national dataset to bear on this question, we are able to provide insight into where and why dual accountability might operate. Second, what explains variation in the extent to which party systems are nationalized across countries and time? We build on previous literature to suggest a number of factors likely to impact the extent of nationalization. We examine those factors in the context of provincial-level elections in Argentina, Canada, Germany and the United States. Using national and sub-national economic data, we find little evidence of dual accountability in any of our countries. We find that economic performance matters little for regional electoral outcomes, and where it does, sub-national outcomes reflect national rather than sub-national conditions. More important are the roles of partisan relations across levels of government and election timing. Sub-national co-partisans of the nationally governing party lose votes, particularly as the time from the most recent national election grows. The strength of these effects varies across our cases in predictable ways. [Reprinted by permission of Sage Publications Ltd., copyright holder.]

This paper assesses the extent to which party systems are nationalized in four federations. In doing so, the research addresses two questions. First, is dual accountability operational across decentralized countries, or do sub-national voters turn to national cues as a means to economize in a complex information environment? By bringing a cross-national dataset to bear on this question, we are able to provide insight into where and why dual accountability might operate. Second, what explains variation in the extent to which party systems are nationalized across countries and time? We build on previous literature to suggest a number of factors likely to impact the extent of nationalization. We examine those factors in the context of provincial-level elections in Argentina, Canada, Germany and the United States. Using national and sub-national economic data, we find little evidence of dual accountability in any of our countries. We find that economic performance matters little for regional electoral outcomes, and where it does, sub-national outcomes reflect national rather than sub-national conditions. More important are the roles of partisan relations across levels of government and election timing. Sub-national co-partisans of the nationally governing party lose votes, particularly as the time from the most recent national election grows. The strength of these effects varies across our cases in predictable ways.

Although fiscal policies of central governments sometimes provide modest insurance against regional income shocks, this paper shows that procyclical fiscal policy among provincial governments can easily overwhelm these stabilizing effects. We examine the cyclicality of budget items among provincial governments in seven federations, showing that own‐source taxes are generally highly procyclical, and contrary to common wisdom, revenue sharing and discretionary transfers are either acyclical or procyclical. Constituent governments are thus left alone to smooth their own shocks, and we document the extent to which various restraints on borrowing and saving undermine their ability to do so. The resulting procyclicality of provincial fiscal policy is likely to have important implications in a world where demands for countercyclical fiscal policy are increasing but considerable fiscal responsibilities are being devolved to subnational governments.

This paper examines the role of institutions of territorial representation in shaping long-term patterns of inter-regional redistribution within federations. A simple legislative bargaining model with endogenous taxation suggests that over-represented states should be favored in the distribution of inter-governmental grants regardless of their income level. We demonstrate that a striking relationship between legislative representation and grants holds up in a diverse group of federations from around the world. The relationship appears not to be an artifact of economic development, population size, population density, or the historical conditions under which the federal bargain was struck. Furthermore, we suggest that the attractiveness of poor states as coalition partners implies that intergovernmental transfer systems will often tend toward progressivity under equal apportionment, but the systematic over-representation of wealthy (or poor) states can undermine (or bolster) this logic.

If voters use information about the economy to assess the competence of incumbents, a connection between economic conditions and incumbent success should only be discernible in settings where public policy might plausibly affect the economy, and where the assignment of government responsibility is relatively straightforward. Applying this logic to gubernatorial elections in the United States, we test the following hypothesis: the connection between economic conditions and incumbents' vote shares is mediated by the structure of the state economy. This hypothesis is premised on the idea that voters understand that raw macroeconomic aggregates – when driven by factors like weather, commodity prices and federal policy – are poor signals of incumbent performance. Using data from gubernatorial elections held between 1950 and 1998, we show that the connection between macroeconomic indicators and incumbent success is weak in states dominated by natural resources and farming but quite strong elsewhere. This finding helps explain why earlier studies found no connection between state-level economic conditions and gubernatorial elections.

Recent research on federalism is extremely divided. While some tout the benefits of "market-preserving" federalism, others point to the fragmentation and incoherence of policy in federal states. This research bridges the divide by analyzing the political andfiscalstructures that are likely to account for the highly divergent economic experiences of federal systems around die world. To test these propositions, the authors use an original data set to conduct analyses of budget balance and inflation infifteenfederationsaround the world from 1978 through 1996. The empirical research suggests that the level of fiscal decentralization, the nature of intergovernmental finance, and vertical partisan relations all influence macroeconomic outcomes. The find- ings have broad implications for the widespread move toward greater decentralization and for the theoretical literatures on federalism and macroeconomics.