Budget transparency and fiscal performance: Do open budgets matter?
AbstractExisting published research of the relationship between budget transparency and fiscal performance confirms the expectations that higher budget transparency is associated with smaller budget deficits and lower public debt. However, our previous research did not bring such clear results and raised a fundamental question: Why should greater transparency improve fiscal performance? The objective of the proposed paper is to evaluate the relationship between budget transparency and fiscal performance. Based on the literature review we have identified three channels through which increased transparency may limit excessive public expenditures resulting in budget deficit and public debt: (1) reduce fiscal illusion, (2) decrease information asymmetry between politicians and voters which may improve accountability and increase political competition, and (3) strengthen the enforcement of fiscal rules. The results of statistical analysis (conditional means analysis for 2008 and correlation and regression analysis for 2003 to 2009) did not prove any significant negative relationship between budget transparency, measured by the Open Budget Index, and budget deficit or public debt.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 42260.
Date of creation: 15 Mar 2012
Date of revision:
budget transparency; fiscal performance; Open Budget Index;
Other versions of this item:
- Lucie Sedmihradská & Jakub Haas, 2013. "Budget Transparency and Fiscal Performance: Do Open Budgets Matter?," ACTA VSFS, University of Finance and Administration, vol. 7(2), pages 109-122.
- J88 - Labor and Demographic Economics - - Labor Standards - - - Public Policy
- H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-03 (All new papers)
- NEP-PBE-2012-11-03 (Public Economics)
- NEP-PUB-2012-11-03 (Public Finance)
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.:
- International Monetary Fund, 2005. "Fiscal Transparency and Economic Outcomes," IMF Working Papers 05/225, International Monetary Fund.
- Isabelle Joumard & Per Mathis Kongsrud & Young-Sook Nam & Robert Price, 2003. "Enhancing the Cost Effectiveness of Public Spending: Experience in OECD Countries," OECD Economic Studies, OECD Publishing, vol. 2003(2), pages 109-161.
- Dollery, Brian E & Worthington, Andrew C, 1996. " The Empirical Analysis of Fiscal Illusion," Journal of Economic Surveys, Wiley Blackwell, vol. 10(3), pages 261-97, September.
- Rose, Shanna, 2010. "Institutions And Fiscal Sustainability," National Tax Journal, National Tax Association, vol. 63(4), pages 807-37, December .
- Alt, James E. & Lassen, David Dreyer, 2006. "Fiscal transparency, political parties, and debt in OECD countries," European Economic Review, Elsevier, vol. 50(6), pages 1403-1439, August.
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