Transparency and Manipulation of Public Accounts

26 Pages Posted: 9 Nov 2008 Last revised: 26 Apr 2012

See all articles by Alessandro Gavazza

Alessandro Gavazza

London School of Economics & Political Science (LSE) - Department of Economics

Alessandro Lizzeri

Princeton University - Department of Economics

Date Written: March 1, 2010

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.

Keywords: Transparency, Accountability, Manipulation

JEL Classification: D72, H50

Suggested Citation

Gavazza, Alessandro and Lizzeri, Alessandro, Transparency and Manipulation of Public Accounts (March 1, 2010). Available at SSRN: https://ssrn.com/abstract=1296120 or http://dx.doi.org/10.2139/ssrn.1296120

Alessandro Gavazza (Contact Author)

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Alessandro Lizzeri

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
United States
08544 (Fax)

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