Government Information Transparency

Facundo Albornoz, Joan Esteban () and Paolo Vanin

No 392, Working Papers from Barcelona School of Economics

Abstract: This paper studies a model of announcements by a privately informed 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 result 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 transparency 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)
Date: 2009-05
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Related works:
Working Paper: Government Information Transparency (2010)
Working Paper: Government Information Transparency (2009)
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