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Fiscal Transparency, Gubernatorial Popularity, and the Scale of Government: Evidence from the States

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  • James E. Alt
  • David Dreyer Lassen
  • David Skilling

Abstract

We explore the effect of transparency of fiscal institutions on the scale of government and gubernatorial popularity using a formal model of accountability. We construct an index of fiscal transparency for the American states from detailed budgetary information. With cross-section data for 1986-1995, we find that - on average and controlling for other influential factors - fiscal transparency increases both the scale of government and gubernatorial popularity. The results, subjected to extensive robustness checks, imply that more transparent budget institutions induce greater effort by politicians, to which voters give higher job approval, on average. Voters also respond by entrusting greater resources to politicians where insittutions are more transparent, leading to larger size of government.

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File URL: http://www.econ.ku.dk/epru/files/wp/WEB-blaa-2001-16.pdf
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Bibliographic Info

Paper provided by Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics in its series EPRU Working Paper Series with number 01-16.

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Date of creation: Nov 2001
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Handle: RePEc:kud:epruwp:01-16

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  1. Jeffrey Zax, 1989. "Initiatives and government expenditures," Public Choice, Springer, vol. 63(3), pages 267-277, December.
  2. Timothy Besley & Stephen Coate, 2000. "Issue Unbundling via Citizens' Initiatives," NBER Working Papers 8036, National Bureau of Economic Research, Inc.
  3. Timothy Besley & Anne Case, 1993. "Does Electoral Accountability Affect Economic Policy Choices? Evidence from Gubernatorial Term Limits," NBER Working Papers 4575, National Bureau of Economic Research, Inc.
  4. Matsusaka, John G, 1995. "Fiscal Effects of the Voter Initiative: Evidence from the Last 30 Years," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 587-623, June.
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Cited by:
  1. Bjørnskov, Christian & Potrafke, Niklas, 2013. "The size and scope of government in the US states: Does party ideology matter?," Munich Reprints in Economics 20275, University of Munich, Department of Economics.
  2. Eiji Yamamura & Haruo Kondoh, 2012. "Government transparency and expenditure in the rent-seeking industry: The case of Japan for 1998–2004," EERI Research Paper Series EERI_RP_2012_13, Economics and Econometrics Research Institute (EERI), Brussels.
  3. Bjørnskov, Christian & Potrafke, Niklas, 2012. "Political ideology and economic freedom across Canadian provinces," Munich Reprints in Economics 20277, University of Munich, Department of Economics.
  4. Mark Schelker, 2012. "The influence of auditor term length and term limits on US state general obligation bond ratings," Public Choice, Springer, vol. 150(1), pages 27-49, January.

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