Do Government Audits Reduce Corruption? Estimating the Impacts of Exposing Corrupt Politicians

Eric Avis, Claudio Ferraz and Frederico Finan

No 22443, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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.

JEL-codes: H41 H77 H83 K42 O1 O38 O43 O54 (search for similar items in EconPapers)
Date: 2016-07
New Economics Papers: this item is included in nep-dev, nep-lam, nep-law and nep-pol
Note: DEV PE POL
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Published as Eric Avis & Claudio Ferraz & Frederico Finan, 2018. "Do Government Audits Reduce Corruption? Estimating the Impacts of Exposing Corrupt Politicians," Journal of Political Economy, vol 126(5), pages 1912-1964.

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Related works:
Journal Article: Do Government Audits Reduce Corruption? Estimating the Impacts of Exposing Corrupt Politicians (2018)
Working Paper: Do Government Audits Reduce Corruption: Estimating the Impacts of Exposing Corrupt Politicians (2016)
Working Paper: Do Government Audits Reduce Corruption? Estimating the Impacts of Exposing Corrupt Politicians (2016)
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