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Auditors and fiscal policy: Empirical evidence on a little big institution

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  • Schelker, Mark
  • Eichenberger, Reiner

Abstract

Various political institutions designed to control the government have been analyzed in the academic literature. However, an important institution has been neglected so far: independent auditing institutions with an extended mandate to audit the budget draft and individual policy proposals. We argue that such auditors improve transparency and provide essential information on the impact of policy proposals on common pool resources, which leads to less wasteful spending. We empirically analyze the impact of such auditors on fiscal policy at the Swiss local level. Auditors who can evaluate and criticize policy proposals ex ante to policy decisions, significantly reduce the general tax burden and public expenditures. The results are similar for different datasets and robust to various changes in the econometric specification.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Comparative Economics.

Volume (Year): 38 (2010)
Issue (Month): 4 (December)
Pages: 357-380

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Handle: RePEc:eee:jcecon:v:38:y:2010:i:4:p:357-380

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Web page: http://www.elsevier.com/locate/inca/622864

Related research

Keywords: Public auditor Audit court Auditing Transparency Information asymmetry;

References

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Cited by:
  1. Funk, Patricia & Gathmann, Christina, 2013. "Voter preferences, direct democracy and government spending," European Journal of Political Economy, Elsevier, vol. 32(C), pages 300-319.
  2. Schelker, Mark, 2012. "Auditor expertise: Evidence from the public sector," Economics Letters, Elsevier, vol. 116(3), pages 432-435.

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