Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/176135 
Year of Publication: 
2016
Series/Report no.: 
Texto para discussão No. 652
Publisher: 
Pontifícia Universidade Católica do Rio de Janeiro (PUC-Rio), Departamento de Economia, Rio de Janeiro
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.
Subjects: 
Corruption
Audits
Political Selection
Political Accountability
Judicial accountability
JEL: 
D72
D78
H41
K42
O17
Document Type: 
Working Paper

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