Transparency and Manipulation of Public Accounts

Alessandro Gavazza, Alessandro Lizzeri

Research output: Contribution to journalArticle

6 Scopus citations

Abstract

We study the policy choices of an incumbent politician when voters imperfectly observe aggregate spending and the incumbent's ability. We show that total spending is decreasing in the transparency of spending, but increasing in the transparency of the incumbent's ability. The model further provides a possible explanation of the choice of inefficient tools of redistribution, and investigates the incentives for politicians to manipulate public accounts. We show that politicians may choose inefficient and manipulable tools, but that this choice has positive welfare consequences because it leads to a reduction in spending.

Original languageEnglish (US)
Pages (from-to)327-349
Number of pages23
JournalJournal of Public Economic Theory
Volume13
Issue number3
DOIs
StatePublished - Jun 2011
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Finance
  • Sociology and Political Science
  • Economics and Econometrics

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