Budget Transparency, Fiscal Performance, and Political Turnout: An International Approach

• Author: Bernardino Benito,Francisco Bastida
• DOI: http://doi.org/10.1111/j.1540-6210.2009.01988.x
• Published date: 01 May 2009
• Date: 01 May 2009

Budget Transparency, Fiscal Performance, and Political Turnout 403

Bernardino Benito

Francisco Bastida

University of Murcia

Budget Transparency, Fiscal Performance, and Political

Turnout: An International Approach

Fostering Fiscal

Responsibility:

International,

Federal, and Local

Government

Perspectives

Bernardino Benito is a professor of

public sector accounting at the University

of Murcia in Spain. He has more than 40

publications in national and international

books and journals to his credit. He also

has directed research programs related to

the public sector, especially to the economy,

eff‌i ciency, and effectiveness of the different

services in this sector. He is a member of the

team that established the basic guidelines

for accounting reform in the European

Union.

E-mail: benitobl@um.es

Francisco Bastida is a professor of

public sector accounting at the University

of Murcia in Spain. His scholarship focuses

on public administration f‌i nancial analysis,

and has appeared most recently in the

International Review of Administrative

Sciences

and

Public Administration.

His

current research focuses on the impact

of transparency in government f‌i nancial

reporting on socioeconomic variables from

an international perspective.

E-mail: alba@um.es

 is paper attempts, for the f‌i rst time, to assess the

relationships between budget transparency, f‌i scal

situation, and political turnout using a comparative

international approach. With this aim, the authors

build a comprehensive index of budget transparency

encompassing 40 budget features based on international

standards for a sample of 41 countries.  ey f‌i nd a

positive relationship between national government f‌i scal

balance and budget transparency:  e more information

the budget discloses, the less the politicians can use f‌i scal

def‌i cits to achieve opportunistic goals.  e univariate

analysis shows a positive relationship between political

turnout and transparency.  is result gives some evidence

of a positive answer to the question raised by James Alt

and David Dreyer Lassen: Does transparency af‌f ect

political outcomes such as turnout? To some extent, that

the more transparent the budget reports are, the more

incentives people have to vote. With respect to three

variables—transparency, government f‌i scal balance, and

electoral turnout—three clusters of countries arise: low

transparency–f‌i scal imbalance, low transparency–small

f‌i scal imbalance and high transparency–f‌i scal surplus.

After the 1970s, many countries started to

accumulate public debt. As a result, political

economy explanations of the phenomenon

attracted greater interest. As the literature developed,

more attention was devoted to the role of budgetary

institutions as a means of controlling debt accumula-

tion (Considine 2002). Accordingly, interest is grow-

ing in how political and institutional factors, among

them budget transparency, are related to the central

government’s f‌i scal situation (Alesina and Perotti

1996; Hagen and Vabo 2005;

Stein, Talvi, and Grisanti 1998).

As Alesina et al. (1999) write,

“[F]iscal institutions are not

just a ‘veil’ but, on the contrary,

inf‌l uence f‌i scal outcomes.” In

this way, Poterba (1994), in a

survey focused on U.S. states,

suggests that f‌i scal institutions

and political factors matter

for short-run def‌i cit dynamics. If we consider the

European context, the Maastricht Treaty established

compulsory limits on debt and def‌i cits. Some of the

main European Union (EU) members, such as France

or Germany, have struggled to adjust their budgets in

order to accomplish those limits.

Reviglio (2001) raises two important questions: Are there

substitutes for the political system reform that will drive

public expenditure reforms? And might improving public

expenditure management and accounting help overcome

the inability of political systems to control public expendi-

ture? Budget transparency—that is, sound budget proce-

dures and the elimination of gimmicks to escape from f‌i scal

constraints—could af‌f ect public expenditure by improving

its management and eliminating gimmicks that bypass

f‌i scal constraints. Strengthening budget procedures would

improve managerial performance and the enforcement of

legislation.  ese improvements would enhance account-

ability and budget transparency. Better expenditure manage-

ment may facilitate the implementation of tough policy

decisions.  is may force governments to adopt measures to

reduce expenditure (Reviglio 2001).

If we consider the three theoretical phases of any

budget process, we see that political institutions play

a role in the f‌i scal indicators of def‌i cit and debt.  ese

phases are (1) formulation of a budget proposal within

the executive, (2) presentation and approval of the

budget in the legislature, and (3) implementation of

the budget by the bureaucracy. Voting procedures

are clearly important because they establish who and

when can inf‌l uence the budget. Transparency is equal-

ly important because “creative

budgeting” can circumvent even

the strictest voting procedures.

Both issues are connected,

as voting procedures have an

impact on the f‌i nal outcome

if the latter can be monitored

because it is transparent. Several

“tricks” may inf‌l uence taxpayers

and voters’ perceptions, such as

After the 1970s, many

countries started to accumulate

public debt. As a result, political

economy explanations of the

phenomenon attracted

greater interest.

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