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Rethinking public auditing institutions: Empirical evidence from Swiss municipalities

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  • Mark Schelker

    (University of Fribourg, Switzerland; CREMA)

  • Reiner Eichenberger

    (University of Fribourg, Switzerland; CREMA)

Abstract

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

Suggested Citation

  • Mark Schelker & Reiner Eichenberger, 2008. "Rethinking public auditing institutions: Empirical evidence from Swiss municipalities," Working Papers 2008/3, Institut d'Economia de Barcelona (IEB).
    • Handle: RePEc:ieb:wpaper:doc2008-3
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    Cited by:

    1. Schelker, Mark & Eichenberger, Reiner, 2010. "Auditors and fiscal policy: Empirical evidence on a little big institution," Journal of Comparative Economics, Elsevier, vol. 38(4), pages 357-380, December.

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    More about this item

    Keywords

    Auditor; audit court; special interests; political economics; public finance.;
    All these keywords.

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • H10 - Public Economics - - Structure and Scope of Government - - - General

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