DP3668 Transparency Gloves for Grabbing Hands? Politics and (Mis)Governance

Author(s): Tomer Blumkin, Mark Gradstein
Publication Date: December 2002
Keyword(s): democracy, political corruption, transparency
JEL(s): D72, D78
Programme Areas: Public Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=3668

Employing the canonical political agency model, this Paper studies the incentives of the government to provide high-quality services by reducing corruption. Acting as a principal in a moral hazard framework, the public disciplines the incumbent by replacing him if the generated output is unsatisfactorily low. The implications of the model indicate the importance of transparency, of the media, and of political contestability for taming corruption. The existing empirical evidence is shown to broadly support these conclusions.