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Fiscal Transparency and Fiscal Policy Outcomes in OECD Countries

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  • James E. Alt

    (Harvard University)

  • David Dreyer Lassen

    (Economic Policy Research Unit, University of Copenhagen)

Abstract

It is widely believed and often argued that fiscal, or budgetary, transparency has large, positive effects on fiscal performance. However, the evidence linking transparency and fiscal policy outcomes is far from compelling. We present a career-concerns model with political parties to analyze the effects of fiscal transparency on public debt accumulation. To test the predictions of the model, we construct a replicable index of fiscal transparency. Simultaneous estimates of debt and transparency on 19-country OECD data strongly confirm that a higher degree of fiscal transparency is associated with lower public debt and deficits.

Suggested Citation

  • James E. Alt & David Dreyer Lassen, 2003. "Fiscal Transparency and Fiscal Policy Outcomes in OECD Countries," EPRU Working Paper Series 03-02, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  • Handle: RePEc:kud:epruwp:03-02
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    File URL: http://www.econ.ku.dk/epru/files/wp/wp-03-02.pdf
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:poleco:v:49:y:2017:i:c:p:146-163 is not listed on IDEAS
    2. Besley, Timothy & Smart, Michael, 2007. "Fiscal restraints and voter welfare," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 755-773, April.
    3. Bordignon, Massimo & Grembi, Veronica & Piazza, Santino, 2017. "Who do you blame in local finance? An analysis of municipal financing in Italy," European Journal of Political Economy, Elsevier, vol. 49(C), pages 146-163.
    4. Emanuele Bracco & Francesco Porcelli & Michela Redoano, 2013. "Political Competition, Tax Salience and Accountability: Theory and Some Evidence from Italy," CESifo Working Paper Series 4167, CESifo Group Munich.
    5. Amoroso Nicolás, 2008. "Transparency and Numeric Rules in the Budgeting Process: Theory and Evidence," Working Papers 2008-13, Banco de México.
    6. Andrew J Tiffin & Christian B. Mulder & Charalambos Christofides, 2003. "The Link Between Adherence to International Standards of Good Practice, Foreign Exchange Spreads, and Ratings," IMF Working Papers 03/74, International Monetary Fund.
    7. Peter Montiel & Luis Servén, 2006. "Macroeconomic Stability in Developing Countries: How Much Is Enough?," World Bank Research Observer, World Bank Group, vol. 21(2), pages 151-178.
    8. Williams, Andrew, 2015. "A global index of information transparency and accountability," Journal of Comparative Economics, Elsevier, vol. 43(3), pages 804-824.
    9. Yongseok Shin & Rachel Glennerster, 2003. "Is Transparency Good for You, and Can the IMF Help?," IMF Working Papers 03/132, International Monetary Fund.
    10. Sophia Gollwitzer, "undated". "Budget Institutions and Fiscal Performance in Africa," Discussion Papers 10/02, University of Nottingham, CREDIT.
    11. International Monetary Fund, 2005. "Fiscal Transparency and Economic Outcomes," IMF Working Papers 05/225, International Monetary Fund.
    12. Agnese Sacchi & Simone Salotti, 2016. "A Comprehensive Analysis of Expenditure Decentralization and of the Composition of Local Public Spending," Regional Studies, Taylor & Francis Journals, vol. 50(1), pages 93-109, January.
    13. Yves M. Tehou TEKENG & Mesbah Fathy SHARAF, 2015. "Fiscal Transparency, Measurement and Determinants: Evidence from 27 Developing Countries," Journal of Economics and Political Economy, KSP Journals, vol. 2(1), pages 69-91, March.

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