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Government Information Transparency

Author

Listed:
  • Facundo Albornoz
  • Joan Esteban
  • Paolo Vanin

Abstract

This paper studies a model of announcements by a privately in- formed government about the future state of the economic activity in an economy subject to recurrent shocks and with distortions due to income taxation. Although transparent communication would ex ante be desirable, we find that even a benevolent government may ex-post be non-informative, in an attempt to countervail the tax distortion with a `second best' compensating distortion in information. This re- sult provides a rationale for independent national statistical offices, committed to truthful communication. We also find that whether inequality in income distribution favors or harms government trans- parency depends on labor supply elasticity.

Suggested Citation

  • Facundo Albornoz & Joan Esteban & Paolo Vanin, 2009. "Government Information Transparency," Discussion Papers 09-03, Department of Economics, University of Birmingham.
    • Handle: RePEc:bir:birmec:09-03
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    References listed on IDEAS

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The case for independent statistical agencies
      by Economic Logician in Economic Logic on 2009-06-12 02:37:00

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    More about this item

    Keywords

    Government announcements; Cheap talk; Asymmetric information; Inequality;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

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