Government Information Transparency
Facundo Albornoz (),
Joan Esteban () and
Paolo Vanin ()
Discussion Papers from Department of Economics, University of Birmingham
This paper studies a model of announcements by a privately in- formed government about the future state of the economic activity in an economy subject to recurrent shocks and with distortions due to income taxation. Although transparent communication would ex ante be desirable, we find that even a benevolent government may ex-post be non-informative, in an attempt to countervail the tax distortion with a `second best' compensating distortion in information. This re- sult provides a rationale for independent national statistical offices, committed to truthful communication. We also find that whether inequality in income distribution favors or harms government trans- parency depends on labor supply elasticity.
Keywords: Government announcements; Cheap talk; Asymmetric information; Inequality (search for similar items in EconPapers)
JEL-codes: D82 E61 (search for similar items in EconPapers)
Pages: 47 pages
New Economics Papers: this item is included in nep-cta, nep-ltv and nep-pbe
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Working Paper: Government Information Transparency (2010)
Working Paper: Government Information Transparency (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:bir:birmec:09-03
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