Auditors and Fiscal Policy : Empirical Evidence on a Little Big Institution
Journal
Journal of Comparative Economics
ISSN
0147-5967
ISSN-Digital
1095-7227
Type
journal article
Date Issued
2010-12-02
Author(s)
Abstract
Various political institutions designed to control the government have been analyzed in the academic literature. However, an important institution has been neglected so far: independent auditing institutions with an extended mandate to audit the budget draft and individual policy proposals. We argue that such auditors improve transparency and provide essential information on the impact of policy proposals on common pool resources, which leads to less wasteful spending. We empirically analyze the impact of such auditors on fiscal policy at the Swiss local level. Auditors who can evaluate and criticize policy proposals ex ante to policy decisions, significantly reduce the general tax burden and public expenditures. The results are similar for different datasets and robust to various changes in the econometric specification.
Language
English
Keywords
Public auditor
Audit court
Auditing
Transparency
Information asymmetry
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Elsevier
Publisher place
Amsterdam
Volume
38
Number
4
Start page
357
End page
380
Pages
24
Subject(s)
Division(s)
Eprints ID
70882