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The Causes of Fiscal Transparency: Evidence from the American States

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Author Info

  • James E. Alt

    (Department of Government, Harvard University)

  • David Dreyer Lassen

    (Department of Economics, University of Copenhagen)

  • Shanna Rose

    (Department of Political Science, State University of New York (SUNY) - Stony Brook)

Abstract

We use unique panel data on the evolution of transparent budget procedures in the American states over the past three decades to explore the political and economic determinants of fiscal transparency. Our case studies and quantitative analysis suggest that both politics and fiscal policy outcomes influence the level of transparency. More equal political competition and power sharing are associated with both greater levels of fiscal transparency and increases in fiscal transparency during the sample period. Political polarization and past fiscal conditions, in particular state government debt and budget imbalance, also appear to affect the level of transparency.

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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 06-02.

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Length: 30 pages
Date of creation: Feb 2006
Date of revision:
Handle: RePEc:kud:epruwp:06-02

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  1. Gelos, Gaston & Wei, Shang-Jin, 2004. "Transparency and International Portfolio Holdings," CEPR Discussion Papers 4476, C.E.P.R. Discussion Papers.
  2. Timothy Besley & Anne Case, 2003. "Political Institutions and Policy Choices: Evidence from the United States," Journal of Economic Literature, American Economic Association, vol. 41(1), pages 7-73, March.
  3. Kenneth Rogoff, 1987. "Equilibrium Political Budget Cycles," NBER Working Papers 2428, National Bureau of Economic Research, Inc.
  4. Robert Barro, 1973. "The control of politicians: An economic model," Public Choice, Springer, vol. 14(1), pages 19-42, March.
  5. Milesi-Ferretti, Gian Maria, 2001. "Good, Bad or Ugly? On the Effects of Fiscal Rules with Creative Accounting," CEPR Discussion Papers 2663, C.E.P.R. Discussion Papers.
  6. Torsten Persson & Gerard Roland & Guido Tabellini, . "Separation of Powers and Political Accountability," Working Papers 100, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  7. Judson, Ruth A. & Owen, Ann L., 1999. "Estimating dynamic panel data models: a guide for macroeconomists," Economics Letters, Elsevier, vol. 65(1), pages 9-15, October.
  8. Alberto Alesina & Allan Drazen, 1989. "Why are Stabilizations Delayed?," NBER Working Papers 3053, National Bureau of Economic Research, Inc.
  9. Andrea Prat, 2002. "The Wrong Kind of Transparency," STICERD - Theoretical Economics Paper Series 439, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  10. Assar Lindbeck & Jörgen Weibull, 1987. "Balanced-budget redistribution as the outcome of political competition," Public Choice, Springer, vol. 52(3), pages 273-297, January.
  11. Oecd, 2001. "OECD Best Practices for Budget Transparency," OECD Journal on Budgeting, OECD Publishing, vol. 1(3), pages 7-14.
  12. Petra M. Geraats, 2002. "Central Bank Transparency," Economic Journal, Royal Economic Society, vol. 112(483), pages 532-565, November.
  13. Murray Petrie, 2003. "Promoting Fiscal Transparency the Complementary Roles of the Imf, Financial Markets and Civil Society," IMF Working Papers 03/199, International Monetary Fund.
  14. George Kopits & J. D. Craig, 1998. "Transparency in Government Operations," IMF Occasional Papers 158, International Monetary Fund.
  15. Alesina, Alberto & Perotti, Roberto, 1996. "Fiscal Discipline and the Budget Process," American Economic Review, American Economic Association, vol. 86(2), pages 401-07, May.
  16. Alessandro Gavazza & Alessandro Lizzeri, 2009. "Transparency and Economic Policy," Review of Economic Studies, Oxford University Press, vol. 76(3), pages 1023-1048.
  17. 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. Schelker, Mark, 2011. "Lame Ducks and Divided Government: How Voters Control the Unaccountable," Economics Working Paper Series 1130, University of St. Gallen, School of Economics and Political Science, revised Mar 2012.
  2. Eiji Yamamura & Haruo Kondoh, 2013. "Government Transparency And Expenditure In The Rent-Seeking Industry: The Case Of Japan For 1998–2004," Contemporary Economic Policy, Western Economic Association International, vol. 31(3), pages 635-647, 07.
  3. 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.
  4. Schelker, Mark, 2012. "Auditor expertise: Evidence from the public sector," Economics Letters, Elsevier, vol. 116(3), pages 432-435.
  5. 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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