Transparency and Manipulation of Public Accounts

Alessandro Gavazza, Alessandro Lizzeri

    Research output: Contribution to journalArticle

    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

    ASJC Scopus subject areas

    • Finance
    • Sociology and Political Science
    • Economics and Econometrics

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