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Title: The effects of revealing the prosecution of political corruption on local finances
Authors: Artes, J
Jiménez González, Juan Luis 
Perdiguero, J
UNESCO Clasification: 5301 Política fiscal y hacienda pública nacionales
Keywords: Revealed corruption
Public expenditures
Public revenues
Issue Date: 2022
Project: CSO2013- 40870-R
I.E.F. 154/2014
Journal: Empirical Economics 
Abstract: This paper analyzes the financial implications on local public budgets of disseminating information about the prosecution of political corruption at the local level. We build a database from a wave of corruption scandals in Spain to use a quasi-experimental design and find that after corruption is revealed, both local public revenues and expenditures decrease significantly (approximately by 7 and 5%, respectively) in corruption-ridden municipalities. The effect lasts for a period of time equivalent to a full electoral term and comes mostly from other economic agents’ unwillingness to fund or start new projects in municipalities where the prosecution of corruption has been revealed. These results imply that if one of the consequences of corruption is the inefficient allocation of funds to areas where corrupt politicians can extract more rents, the revelation of the corruption scandal frees up resources that can be used to fund activities with a higher social return.
ISSN: 0377-7332
DOI: 10.1007/s00181-022-02244-2
Source: Empirical Economics [ISSN 0377-7332], v. 64, p. 249-275, (2022)
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