Political determinants of fiscal transparency: a panel data empirical investigation

The investigation of the determinants of fiscal transparency has been mostly performed on cross-sectional data, and it has produced mixed results. This paper improves the existing literature by performing a static and dynamic panel analysis of the effect of a set of political variables on the level of fiscal transparency in 36 democratic countries. By using a recent measure of fiscal transparency based on IMF Governance Finance Statistics and available from 2003 to 2013, we find strong links between political environments and the dynamics of fiscal disclosure. Our results show that government control over the legislature exerts some negative effect on fiscal transparency, while the effect of government ideology is shown to be at least fragile. Furthermore we find that legislature fragmentation exerts a negative effect on fiscal transparency, which suggests that competition within the parliaments does not increase fiscal transparency, but instead it induces governments to react by reducing accessibility to information.