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Strategic transparency and electoral pressure

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  • Moretti, Laura
  • Suzuki, Toru

Abstract

This paper investigates how an office-motivated incumbent can use transparency enhancement on public spending to signal his budgetary management ability and win re-election. We show that, when the incumbent faces a popular challenger, transparency policy can be an effective signaling device. A more popular challenger can reduce the probability to enhance transparency, while voters can be better off due to a more informative signaling. It is also shown that a higher level of public interest in fiscal issues can increase the probability of enhancing transparency, while voters can be worse off by a less informative signaling. --

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Bibliographic Info

Paper provided by Center for Financial Studies (CFS) in its series CFS Working Paper Series with number 2012/19.

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Date of creation: 2012
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Handle: RePEc:zbw:cfswop:201219

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Related research

Keywords: Fiscal Transparency; Electoral Pressure; Signaling Game; Perfect Sequential Equilibrium;

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