Joaquín Artés , Juan Luis Jiménez , Jordi Perdiguero (p)

Willem Sas

This paper analyzes the financial implications of disseminating information about corruption. In particular, we study how the revelation of local corruption affects public finances. We use data from Spain during the period 2003-2010 and match municipalities that suffer a corruption scandal with a control sample of similar municipalities. We use two identification strategies. The first one matches each municipality in which a scandal has been revealed to a corrupt municipality in which the scandal has not yet been revealed. The second strategy matches municipalities with corruption scandals to similar municipalities without corruption scandals and then implements a differences-in-differences regression to isolate the causal effect. We find that after corruption is revealed, both revenues and expenditures decrease significantly (approximately by 8% and 7%, respectively) in corruption-ridden municipalities compared to the counterfactual group. The effect comes mostly from other economic agents’ unwillingness to fund or start new infrastructure projects in municipalities where corruption has been revealed.

Willem Sas (p), David Bell

Jordi Perdiguero

The system for financing the public provision of goods and services among the UK nations is flawed. It is unfair, opaque and lacks legitimacy. Its attempts to promote local accountability through the transfer of tax-raising powers lack theoretical rationale and their asymmetry is questionable. This paper explores a set of more equitable, transparent and intuitive guidelines to design a new fiscal framework for the UK nations. It builds these from a set of principles rather than an ad hoc process dictated by political expediency, recognising that any newly developed framework will be subject to a ‘participation constraint’. The latter then captures both the possibility that one or more members leave the Union if partition has sufficient popular support, or that additional phases of devolution are called for. Finally, this paper examines the process and institutional arrangements needed to support transition to, and establishment of, a new fiscal framework for the UK.