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Market distortions and government transparency

Albornoz, Facundo; Esteban, Joan; Vanin, Paolo

Authors

Facundo Albornoz facundo.albornoz@nottingham.ac.uk

Joan Esteban

Paolo Vanin

Abstract

In this paper, we investigate how government transparency depends on economic distortions. We first consider an abstract class of economies in which a benevolent policy maker is privately informed about the exogenous state of the economy and contemplates whether to release this information. Our key result is that distortions limit communication: even if transparency is ex ante Pareto superior to opaqueness, it cannot constitute an equilibrium when distortions are sufficiently high. We next confirm this broad insight in two applied contexts, in which monopoly power and income taxes are the specific sources of distortions. (JEL: D82, E61)

Journal Article Type Article
Publication Date Feb 1, 2014
Journal Journal of the European Economic Association
Electronic ISSN 1542-4766
Publisher Oxford University Press (OUP)
Peer Reviewed Peer Reviewed
Volume 12
Issue 1
Institution Citation Albornoz, F., Esteban, J., & Vanin, P. (2014). Market distortions and government transparency. Journal of European Economic Association, 12(1), doi:10.1111/jeea.12052
DOI https://doi.org/10.1111/jeea.12052
Publisher URL http://onlinelibrary.wiley.com/doi/10.1111/jeea.12052/abstract
Copyright Statement Copyright information regarding this work can be found at the following address: http://eprints.nottingh.../end_user_agreement.pdf

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://eprints.nottingham.ac.uk/end_user_agreement.pdf




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