Democratic Accountability for Public Debt

Abstract

What does it mean for public financial managers to be professionally and democratically accountable in managing public debt? How do they accomplish (or fall short of) accountability? What are the results of their accountability (or lack thereof)? This paper develops an analytic framework for mapping the accountability space within which public financial managers work to reconcile diverse normative expectations as they exercise discretionary judgment and choice in the area of public-debt management specifically. An accountability framework offers the possibility of connecting previous literature's focus on micro-level decision making and social psychology on the one hand, and macro-level normative guidance offered by public-choice theorists and public-finance economists on the other hand, by focusing on the interactions of macro- and meso-level norms and expectations with micro-level decision processes, judgment and choice.

The framework is meant to provide a structure for understanding in empirical settings how state and local government financial managers' professional, democratic, and other accountabilities interact with each other and with other expressed and implied expectations of relevant stakeholders. It is intended to serve as a basis for conducting empirical research to understand how actual debt-management decisions and behavior respond (or fail to respond) to those various norms, and with what results. An additional, normative goal is to contribute to the development of means by which public administrators can understand and manage the conflict between espoused public preferences for thrift and implied and acted-upon preferences for profligacy, by making decisions that accommodate, resolve, or transcend those dilemmas of accountability.

Keywords: Municipal Bonds, Accountability, Public Finance, Public Debt, Professional Ethics

JEL Classification: D73, D84, D92, H74, H83