Market distortions and government transparency

Albornoz, Facundo and Esteban, Joan and Vanin, Paolo (2014) Market distortions and government transparency. Journal of the European Economic Association, 12 (1). pp. 200-222. ISSN 1542-4766

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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)

Item Type: Article
Schools/Departments: University of Nottingham UK Campus > Faculty of Social Sciences > School of Economics
Identification Number: https://doi.org/10.1111/jeea.12052
Depositing User: Albornoz Crespo, Facundo
Date Deposited: 22 Aug 2016 15:09
Last Modified: 17 Sep 2016 17:43
URI: http://eprints.nottingham.ac.uk/id/eprint/35635

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