Do Government Audits Reduce Corruption? Estimating the Impacts of Exposing Corrupt Politicians / Eric Avis, Claudio Ferraz, Frederico Finan.

Format:

Book

Author/Creator:

Avis, Eric.

Contributor:

National Bureau of Economic Research.

Ferraz, Claudio.

Finan, Frederico.

Series:

Working Paper Series (National Bureau of Economic Research) no. w22443.

NBER working paper series no. w22443

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2016.

Summary:

Political corruption is considered a major impediment to economic development, and yet it remains pervasive throughout the world. This paper examines the extent to which government audits of public resources can reduce corruption by enhancing political and judiciary accountability. We do so in the context of Brazil's anti-corruption program, which randomly audits municipalities for their use of federal funds. We find that being audited in the past reduces future corruption by 8 percent, while also increasing the likelihood of experiencing a subsequent legal action by 20 percent. We interpret these reduced-form findings through a political agency model, which we structurally estimate. Based on our estimated model, the reduction in corruption comes mostly from the audits increasing the perceived threat of the non-electoral costs of engaging in corruption.

Notes:

Print version record

July 2016.