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Fiscal Transparency and Fiscal Policy Outcomes in OECD Countries

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Author Info
James E. Alt (Harvard University)
David Dreyer Lassen (Economic Policy Research Unit, University of Copenhagen)

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Abstract

It is widely believed and often argued that fiscal, or budgetary, transparency has large, positive effects on fiscal performance. However, the evidence linking transparency and fiscal policy outcomes is far from compelling. We present a career-concerns model with political parties to analyze the effects of fiscal transparency on public debt accumulation. To test the predictions of the model, we construct a replicable index of fiscal transparency. Simultaneous estimates of debt and transparency on 19-country OECD data strongly confirm that a higher degree of fiscal transparency is associated with lower public debt and deficits.

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Paper provided by Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics in its series EPRU Working Paper Series with number 03-02.

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Length: 43 pages
Date of creation: Feb 2003
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Handle: RePEc:kud:epruwp:03-02

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  25. Timothy Besley & Andrea Prat, 2006. "Handcuffs for the Grabbing Hand? Media Capture and Government Accountability," American Economic Review, American Economic Association, vol. 96(3), pages 720-736, June. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Yongseok Shin & Rachel Glennerster, 2003. "Is Transparency Good for You, and Can the IMF Help?," IMF Working Papers 03/132, International Monetary Fund. [Downloadable!]
  2. Farhan Hameed, 2005. "Fiscal Transparency and Economic Outcomes," IMF Working Papers 05/225, International Monetary Fund. [Downloadable!]
  3. Richard Bird, 2001. "Fiscal Federalism in Russia: A Canadian Perspective," International Tax Program Papers 0409, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto, revised Dec 2003. [Downloadable!]
  4. Montiel, Peter & Serven, Luis, 2004. "Macroeconomic stability in developing countries - How much is enough?," Policy Research Working Paper Series 3456, The World Bank. [Downloadable!]
    Other versions:
  5. Charalambos Christofides & Christian B. Mulder & Andrew Tiffin, 2003. "The Link Between Adherence to International Standards of Good Practice, Foreign Exchange Spreads, and Ratings," IMF Working Papers 03/74, International Monetary Fund. [Downloadable!]
  6. James E. Alt & David Dreyer Lassen & David Skilling, 2001. "Fiscal Transparency, Gubernatorial Popularity, and the Scale of Government: Evidence from the States," EPRU Working Paper Series 01-16, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics. [Downloadable!]
  7. Anthony Annett, 2002. "Politics, Government Size, and Fiscal Adjustment in Industrial Countries," IMF Working Papers 02/162, International Monetary Fund. [Downloadable!]
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