Credible communication in dynastic government

• 成果类型: Article
• 署名作者: Lagunoff, R
• 署名单位: Georgetown University
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2004.10.003
• 发表日期: 2006
• 页码: 59-86
• 关键词: dynastic government; dynamic policy bias; auditing; auditor neutrality; credible communication

摘要

This paper studies information disclosure in a model of dynastic government. When information about 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 paper 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. Various extensions to this baseline model are examined. In one extension, liberal (i.e., those prefering larger government expenditures) and conservative (those prefering smaller expenditures) regimes and auditors evolve over time. It is shown that conservative (liberal) auditors are not credible when the Current regime is also conservative'' (liberal). Moreover, because information transmission stops when the auditor's and the regime's biases coincide, effective deterrents even in the good periods (when the auditor's and [lie administration's biases differ) are difficult to construct. In all periods the equilibrium requirement of auditor neutrality constrains the dynamic incentives for efficient policy choices. These constraints are shown to bind away from optimal policies in standard constructions of equilibrium. Various ways in which auditing protocols can overcome these problems are discussed. (c) 2004 Elsevier B.V. All rights reserved.