Election goals and income redistribution: Recent evidence from Albania

This paper examines the impact of political competition on block grants fro m federal to sub-federal levels of government. We model the extent and dire ction of income redistribution as determined proximately by the political a gendas of central decision makers and, at a deeper level, by the institutio ns within which they find themselves operating. We contrast two political o bjective functions that yield different empirical predictions of the ways i n which politics should affect fiscal policy. Lessons learned here may prov e important in understanding limits on the types of redistribution possible via block grants, given the institutional framework, in both developing an d developed countries. (C) 2001 Elsevier Science B.V. All rights reserved. JEL classification: H1; H7; O1.