IDEAS home Printed from https://ideas.repec.org/p/gwc/wpaper/2009-004.html
   My bibliography  Save this paper

Transparency, Performance, and Agency Budgets: A Rational Expectations Modeling Approach

Author

Listed:
  • Rosen Valchev

    (Duquesne University)

  • Antony Davies

    () (Duquesne University)

Abstract

Existing research suggests that bureaucrats’ optimal behavior is to maximize their agency’s budgets, but does not account for information imperfections nor explore the tactics bureaucrats employ in maximizing their budgets. Drawing on the rational expectations literature, we propose a new theoretical model that describes the behaviors of politicians who, using imperfect information, judge an agency’s performance, and bureaucrats who, by varying the agency’s transparency, alter the degree of information imperfection and so influence the politicians’ abilities to judge the agency’s performance. We then fit data from the government’s Performance Accountability Reports and the Scorecard data set to our model and obtain empirical results that are consistent with what our theoretical model predicts.

Suggested Citation

  • Rosen Valchev & Antony Davies, 2009. "Transparency, Performance, and Agency Budgets: A Rational Expectations Modeling Approach," Working Papers 2009-004, The George Washington University, Department of Economics, Research Program on Forecasting.
  • Handle: RePEc:gwc:wpaper:2009-004
    as

    Download full text from publisher

    File URL: https://www2.gwu.edu/~forcpgm/2009-004.pdf
    File Function: First version, 2009
    Download Restriction: no

    References listed on IDEAS

    as
    1. Palm, F. & Zellner, A., 1991. "To combine or not to combine? issues of combining forecasts," CORE Discussion Papers 1991022, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. repec:cup:apsrev:v:77:y:1983:i:02:p:297-322_24 is not listed on IDEAS
    3. Davies, Antony, 2006. "A framework for decomposing shocks and measuring volatilities derived from multi-dimensional panel data of survey forecasts," International Journal of Forecasting, Elsevier, vol. 22(2), pages 373-393.
    4. Robert J. Mackay & Carolyn L. Weaver, 1983. "Commodity Bundling and Agenda Control in the Public Sector," The Quarterly Journal of Economics, Oxford University Press, vol. 98(4), pages 611-635.
    5. Davies, Antony & Cline, Thomas W., 2005. "A consumer behavior approach to modeling monopolistic competition," Journal of Economic Psychology, Elsevier, vol. 26(6), pages 797-826, December.
    6. repec:cor:louvrp:-1027 is not listed on IDEAS
    7. Kajal Lahiri, 2005. "Analysis of Panel Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(4), pages 1093-1095.
    8. Dunleavy, Patrick, 1985. "Bureaucrats, Budgets and the Growth of the State: Reconstructing an Instrumental Model," British Journal of Political Science, Cambridge University Press, vol. 15(03), pages 299-328, July.
    9. Davies, Anthony & Lahiri, Kajal, 1995. "A new framework for analyzing survey forecasts using three-dimensional panel data," Journal of Econometrics, Elsevier, vol. 68(1), pages 205-227, July.
    10. Tabellini, Guido & Alesina, Alberto, 1990. "Voting on the Budget Deficit," American Economic Review, American Economic Association, vol. 80(1), pages 37-49, March.
    11. De Alessi, Louis, 1969. "Implications of Property Rights for Government Investment Choices," American Economic Review, American Economic Association, vol. 59(1), pages 13-24, March.
    12. Jeffrey S. Banks, 1990. "Monopoly Agenda Control and Asymmetric Information," The Quarterly Journal of Economics, Oxford University Press, vol. 105(2), pages 445-464.
    13. Larkey, Patrick D. & Stolp, Chandler & Winer, Mark, 1981. "Theorizing About the Growth of Government: A Research Assessment," Journal of Public Policy, Cambridge University Press, vol. 1(02), pages 157-220, May.
    14. Breton, Albert & Wintrobe, Ronald, 1975. "The Equilibrium Size of a Budget-maximizing Bureau: A Note on Niskanen's Theory of Bureaucracy," Journal of Political Economy, University of Chicago Press, vol. 83(1), pages 195-207, February.
    15. Fiorina, Morris P. & Noll, Roger G., 1978. "Voters, bureaucrats and legislators : A rational choice perspective on the growth of bureaucracy," Journal of Public Economics, Elsevier, vol. 9(2), pages 239-254, April.
    16. Pommerehne, Werner W & Schneider, Friedrich, 1978. "Fiscal Illusion, Political Institutions, and Local Public Spending," Kyklos, Wiley Blackwell, vol. 31(3), pages 381-408.
    17. Wagner, Richard E & Weber, Warren E, 1975. "Competition, Monopoly, and the Organization of Government in Metropolitan Areas," Journal of Law and Economics, University of Chicago Press, vol. 18(3), pages 661-684, December.
    18. Bert Green & John Tukey, 1960. "Complex analyses of variance: General problems," Psychometrika, Springer;The Psychometric Society, vol. 25(2), pages 127-152, June.
    19. repec:cup:apsrev:v:79:y:1985:i:04:p:1041-1060_23 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    bureaucracy; agency; budget; budget maximization; transparency; performance; imperfect information; Government Performance Reports Act; Scorecard;

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gwc:wpaper:2009-004. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Tara M. Sinclair). General contact details of provider: http://edirc.repec.org/data/degwuus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.