The impacts of fiscal openness: A review of the evidence

Paolo de Renzio and Joachim Wehner
2015

Summary

This report presents the results of a systematic review of existing evidence on the impacts of fiscal openness. This review includes studies that (i) empirically evaluate a causal claim about the impact of an element of fiscal openness; (ii) have achieved publication as a peer-reviewed academic article, or as a book with an academic press or well-known commercial publisher; and (iii) are of sufficient length to qualify as a substantial piece of original research.

The initial stock-take included working papers and so-called “grey literature” more generally, but the paper limits its analysis to material that passed the hurdle of achieving publication as a book or peer-reviewed article, with some make some exceptions. First, the authors also include working paper publications from the IMF, the World Bank, and a few other reputable institutions that have contributed significantly to the debate on fiscal openness and/or are frequently cited in other studies that we examine, as the exclusion of this work would distort the review. Second, the authors were also open to the inclusion of more recent and as yet unpublished studies with a strong likelihood of achieving publication in a scholarly journal in due course.

Following an initial sweep of the literature and applying the above criteria to filter the resulting list of over a hundred studies, the authors identified a core set of 38 papers as the basis for the literature review. Of these, 23 investigate the effects of variables related to fiscal transparency, and 14 relate to participation in budgetary decisions. Only a single study looks at both transparency and participation interventions separately to explore their relative impacts. About three-quarters of all studies use quantitative methods, most of them based on observational data. Only four studies are based on experimental designs, and three might be labelled quasi- or natural experiments. Twenty studies use evidence from a single country, and 18 are based on cross-national data. Most studies fall into three main categories of impacts: macro-fiscal, resource allocation and service delivery, and governance. A fourth impact category, related to development outcomes, contains only a small number of studies.

The quality of the evidence documented in the article is varied. However, the most convincing evidence – in particular the small number of experimental or quasi-experimental studies – documents impacts that many would consider beneficial: lower government borrowing costs due to macro-fiscal disclosure, lower corruption due to the audit of government programs and the disclosure of specific budget execution information, greater electoral accountability of politicians, improved budget allocations due to citizen participation, and participatory budgeting leading to improved health outcomes.

The paper concludes with discussion of areas which are currently under-researched.

Source

De Renzio, P., & Wehner, J. (2015). The impacts of fiscal openness: A review of the evidence. Global Initiative for Fiscal Transparency.