Sedmihradská, Lucie and Haas, Jakub (2012): Budget transparency and fiscal performance: Do open budgets matter?
Download (292kB) | Preview
Existing published research of the relationship between budget transparency and fiscal performance confirms the expectations that higher budget transparency is associated with smaller budget deficits and lower public debt. However, our previous research did not bring such clear results and raised a fundamental question: Why should greater transparency improve fiscal performance? The objective of the proposed paper is to evaluate the relationship between budget transparency and fiscal performance. Based on the literature review we have identified three channels through which increased transparency may limit excessive public expenditures resulting in budget deficit and public debt: (1) reduce fiscal illusion, (2) decrease information asymmetry between politicians and voters which may improve accountability and increase political competition, and (3) strengthen the enforcement of fiscal rules. The results of statistical analysis (conditional means analysis for 2008 and correlation and regression analysis for 2003 to 2009) did not prove any significant negative relationship between budget transparency, measured by the Open Budget Index, and budget deficit or public debt.
|Item Type:||MPRA Paper|
|Original Title:||Budget transparency and fiscal performance: Do open budgets matter?|
|Keywords:||budget transparency, fiscal performance, Open Budget Index|
|Subjects:||J - Labor and Demographic Economics > J8 - Labor Standards: National and International > J88 - Public Policy
H - Public Economics > H6 - National Budget, Deficit, and Debt > H61 - Budget ; Budget Systems
|Depositing User:||Lucie Sedmihradská|
|Date Deposited:||28 Oct 2012 03:48|
|Last Modified:||22 Nov 2016 03:22|
ALESINA, A.; PEROTTI, R. (1999) Budget Deficits and Budget Institutions. In POTERBA, J.M.; VON HAGEN, J. (ed.), Fiscal Institutions and Fiscal Performance, Chicago: The University of Chicago Press, pp. 13-36.
ALT, J.E.; LASSEN, D.D. (2003) Fiscal transparency, political parties and debt in OECD countries. Available at http://www.rwj.harvard.edu/papers/alt.pdf, assessed 11 May 2011.
BENITO, B.; BASTIDA, F. (2009) Budget Transparency, Fiscal Performance, and Political Turnout: An International Approach. Public Administration Review, 69 (3), pp. 403-417.
DE SIMONE, E. (2009) The concept of budget transparency: Between democracy and fiscal illusion. Available at http://www-3.unipv.it/websiep/2009/200931.pdf (assessed 4 November 2011).
DOLLERY, B.E.; WORTHINGTON, A.C. (1996) The Empirical Analysis of Fiscal Illusion. Journal of Economic Surveys, vol. 10. no. 3, pp. 261 – 297.
HAMEED, F. (2005) Fiscal Transparency and Economic Outcomes. IMF Working Paper WP/05/225. Available at http://www.imf.org/external/pubs/ft/wp/2005/wp05225.pdf (assessed 4 November 2011).
INTERNATIONAL MONETARY FUND (2011) World Economic Outlook Database, April 2011. Available at http://www.imf.org/external/pubs/ft/weo/2011/01/weodata/download.aspx (assessed 3 September 2011).
JARMUZEK, M. (2006) Does Fiscal Transparency Matter? The Evidence from Transition Economies. Available at http://iweb.cerge-ei.cz/pdf/gdn/RRCV_77_paper_03.pdf (assessed 4 November 2011).
JOUMARD, I. et al. (2003) Enhancing the Cost Effectiveness of Public Spending: Experience in OECD Countries. OECD Economic Studies, No. 37, 2003/2, pp. 109-161.
KOPITS, G.; CRAIG, J. (1998) Transparency in government operations. International Monetary Fund Occasional paper, No. 158. [Online] at http://www.imf.org/external/pubs/ft/op/158/op158.pdf (9 November 2011).
NITSCHOVÁ L. (merried Sedmihradská), (2001) Rozpočtové instituce v zemích EU. (Budget institutions in the EU countries, text in Czech), in Theoretical and Practical Aspects public Finance, Liberec: Technická univerzita. [Online] at http://nb.vse.cz/~sedmih/kvf-2001.pdf (assessed 11 November 2011).
OECD (2002) Best Practices for Budget Transparency. Available at http://www.oecd.org/dataoecd/33/13/1905258.pdf (assessed 21 February 2011).
OPEN BUDGET PARTNERSHIP (2010) Open budgets. Transform lives: The Open Budget survey 2010. Available at http://www.internationalbudget.org/files/2010_Full_Report-English.pdf (assessed 10 May 2011).
OPEN BUDGET PARTNERSHIP (2010a) Excel Database of Answers to Open Budget Questionnaire 2010. Available at http://internationalbudget.org/what-we-do/open-budget-survey/research-resources/data/ (assessed 3 September 2011).
PERSSON, T.; TABELLINI, G. (2003) The Economic Effects of Constitutions. Cambridge, Massachusetts: The MIT Press. ROSE, S. (2010) Institutions and Fiscal Sustainability. National Tax Journal, December 2010, 63 (4, Part 1), pp. 807–838.
ROUBINI, N.; SACHS, J. (1989) Political and Economic Determinants of Budget deficits in the Industrialised Countries. European Economic Review, n. 1, pp. 903-938.
SEDMIHRADSKÁ, L.; HAAS, J.; ŠTEFEK, M. (2011) Budget transparency and fiscal performance: An initial analysis. Paper presented at the conference Veřejná ekonomika a správa, Ostrava, 6-10 September 2011.
TRANSPARENCY INTERNATIONAL (2011) Corruption Perceptions Index Database. Available at http://www.transparency.org/policy_research/surveys_indices/cpi (assessed on 29 November 2011)
VON HAGEN, J.; HARDEN, I.J. (2004) National Budget Processes and Fiscal Performance. European Economy, No. 3, pp. 311 – 415 .
VON HAGEN, J. (2007) Budgeting Institutions for Better Fiscal Performance., in Ed. Shah, A. (ed.) Budgeting and budgetary institutions. Available at http://www.unicef.org/socialpolicy/files/Budgeting_and_Budgetary_Institutions_Shah07.pdf (assessed 9 November 2011).