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Fiscal Transparency, Gubernatorial Popularity, and the Scale of Government: Evidence from the States

  • James E. Alt
  • David Dreyer Lassen
  • David Skilling

We explore the effect of transparency of fiscal institutions on the scale of government and gubernatorial popularity using a formal model of accountability. We construct an index of fiscal transparency for the American states from detailed budgetary information. With cross-section data for 1986-1995, we find that - on average and controlling for other influential factors - fiscal transparency increases both the scale of government and gubernatorial popularity. The results, subjected to extensive robustness checks, imply that more transparent budget institutions induce greater effort by politicians, to which voters give higher job approval, on average. Voters also respond by entrusting greater resources to politicians where insittutions are more transparent, leading to larger size of government.

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File URL: http://www.econ.ku.dk/epru/files/wp/WEB-blaa-2001-16.pdf
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Paper provided by Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics in its series EPRU Working Paper Series with number 01-16.

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Date of creation: Nov 2001
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Handle: RePEc:kud:epruwp:01-16
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  1. Timothy Besley & Stephen Coate, 2000. "Issue Unbundling via Citizens' Initiatives," NBER Working Papers 8036, National Bureau of Economic Research, Inc.
  2. Besley, Timothy & Case, Anne, 1995. "Does Electoral Accountability Affect Economic Policy Choices? Evidence from Gubernatorial Term Limits," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 769-98, August.
  3. Jeffrey Zax, 1989. "Initiatives and government expenditures," Public Choice, Springer, vol. 63(3), pages 267-277, December.
  4. Matsusaka, John G, 1995. "Fiscal Effects of the Voter Initiative: Evidence from the Last 30 Years," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 587-623, June.
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