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Fiscal Transparency and Fiscal Policy Outcomes in OECD Countries

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  • James E. Alt

    (Harvard University)

  • David Dreyer Lassen

    (Economic Policy Research Unit, University of Copenhagen)

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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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 03-02.

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

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  1. Jensen, Henrik, 2001. "Optimal degrees of transparency in monetary policymaking," Discussion Paper Series 1: Economic Studies 2001,04, Deutsche Bundesbank, Research Centre.
  2. Alesina, Alberto & Hausmann, Ricardo & Hommes, Rudolf & Stein, Ernesto, 1999. "Budget institutions and fiscal performance in Latin America," Journal of Development Economics, Elsevier, vol. 59(2), pages 253-273, August.
  3. Faust, J. & Svensson, L.E.O., 1998. "Transparency and Credibility: Monetary Policy with Unobservable Goals," Papers 636, Stockholm - International Economic Studies.
  4. F. Andrew Hanssen, 2004. "Is There a Politically Optimal Level of Judicial Independence?," American Economic Review, American Economic Association, vol. 94(3), pages 712-729, June.
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Cited by:
  1. Peter Montiel & Luis Servén, 2006. "Macroeconomic Stability in Developing Countries: How Much Is Enough?," World Bank Research Observer, World Bank Group, vol. 21(2), pages 151-178.
  2. Yongseok Shin & Rachel Glennerster, 2003. "Is Transparency Good for You, and Can the IMF Help?," IMF Working Papers 03/132, International Monetary Fund.
  3. Besley, Timothy & Smart, Michael, 2007. "Fiscal restraints and voter welfare," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 755-773, April.
  4. Emanuele Bracco & Francesco Porcelli & Michela Redoano, 2013. "Political Competition, Tax Salience and Accountability: Theory and Some Evidence from Italy," CESifo Working Paper Series 4167, CESifo Group Munich.
  5. Andrew Tiffin & Christian B. Mulder & Charalambos Christofides, 2003. "The Link Between Adherence to International Standards of Good Practice, Foreign Exchange Spreads, and Ratings," IMF Working Papers 03/74, International Monetary Fund.
  6. International Monetary Fund, 2005. "Fiscal Transparency and Economic Outcomes," IMF Working Papers 05/225, International Monetary Fund.
  7. Massimo Bordignon & Santino Piazza, 2010. "Who do you Blame in Local Finance? An Analysis of Municipal Financing in Italy," CESifo Working Paper Series 3100, CESifo Group Munich.
  8. Sophia Gollwitzer, . "Budget Institutions and Fiscal Performance in Africa," Discussion Papers 10/02, University of Nottingham, CREDIT.
  9. Amoroso Nicolás, 2008. "Transparency and Numeric Rules in the Budgeting Process: Theory and Evidence," Working Papers 2008-13, Banco de México.

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