Transparency in State Debt Disclosure Transparency in State Debt Disclosure

By Bo Zhao and Wen Wang

Government transparency has become an increasingly popular and important issue in the United States and in many other countries in recent decades. It helps improve citizens' understanding of public policies, promote public trust in government, reduce corruption, and hold officials accountable for their performance. Transparency hinges critically on the accessibility and disclosure of information, which is widely regarded as a public good contributing to the functioning of markets.

Fiscal transparency is one important aspect of government transparency. One particularly concerning issue, which has been largely hidden from the public view until recently, is the ever-growing debt of public authorities. The public and the media tend to focus on the debt issuance of the primary government units and may give less scrutiny to the numerous public authorities. Ordinary citizens also often find it difficult to track changes in the public authorities' debt from one year to the next.

Despite strong public interest, to the authors' best knowledge, there has been little research on transparency in state and local debt disclosure. This is likely partly due to a lack of data and lack of a measure of debt transparency. To fill this need, the authors develop a new measure of relative debt transparency by comparing two datasets of state debt, one of which has recently become available.

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