Are You Being Served? Political Accountability and Quality of Government

This paper explores, both formally and empirically, the political accountability mechanisms that lie behind the varying levels of public corruption and of effective governance taking place across nations. The first section develops a principal-agent model in which good governance is a function of the extent to which citizens can hold political officials accountable for their actions. Although policy-makers may have strong incentives to appropriate parts of the citizens' income, well-designed institutions (those increasing both informational flows and elite competitiveness) boost political accountability and reduce the space left for the appropriation of rents. The following sections of the paper test the…