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| Author: | Lagunoff, R. |
| Title: | Credible communication in dynastic government |
| Journal: | Journal of Public Economics
2006 : JAN, VOL. 90:1-2, p. 59-86 |
| Index terms: | auditing auditors |
| Freeterms: | credible communication dynastic government |
| Language: | eng |
| Abstract: | Information disclosure is studied in a model of dynastic government. When information about past policy past policy choices comes exclusively from the reports of previous administrations, each administration has an incentive to choose its (suboptimal) one-shot expenditure policy, and then misrepresent its choice to its successor. Consequently, it has been suggested that "horizontal accountability", i.e. a system of governance where auditing functions lie outside the executive branch, can ensure credible disclosure of a government's activities. This article suggests a cautious approach to that view. The baseline model examines the reporting incentives of an external auditor who can independently verify the information each period. Even with auditing, credible disclosure is shown to be problematic. |
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