Creative accounting and electoral motives: Evidence from OECD countries

Markus Reischmann ()

Journal of Comparative Economics, 2016, vol. 44, issue 2, 243-257

Abstract: Using an unbalanced panel of 27 OECD countries over the period 1970–2011, I examine whether electoral motives influenced creative accounting. Governments engage in “below-the-line” operations, such as transactions in financial assets, that do not show up in the deficit figures but give rise to changes in debt. I use the difference between the change in public debt and the deficit (stock-flow adjustment) to measure creative accounting. The results suggest that governments strategically engaged in creative accounting before regular elections so as to sugarcoat the budget balance. I also provide an overview of government interventions that gave rise to large stock-flow adjustments.

Keywords: Stock-flow adjustments; Creative accounting; Public debt; Political business cycles (search for similar items in EconPapers)
JEL-codes: D72 E62 H62 H63 H83 P16 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (39)

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Working Paper: Creative Accounting and Electoral Motives: Evidence from OECD Countries (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:44:y:2016:i:2:p:243-257

DOI: 10.1016/j.jce.2015.07.001

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