Factors that Determine Fiscal Transparency in Latin America
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Abstract
Fiscal transparency has been consistently identified as a key feature of efficient fiscal policy and a prerequisite for good public governance. This text examines the determinants of fiscal transparency in Latin America, based on a panel model of fixed effects, on a sample of 13 Latin American countries in the period 2006-2021. The results show that regulatory quality is a determining factor of fiscal transparency in the region and evidences the importance of institutions in fiscal policies. However, the abundance of natural resources and trade openness do not have a significant impact on fiscal transparency, measured through the open budget index. Good regulatory quality implies that tax laws and regulations are available and accessible to the public in a clear and understandable manner. By establishing easy to understand and effective rules, the margin for discretion and arbitrariness in the application of tax regulations is reduced. The results contribute to reinforcing knowledge about the determining factors and the importance of fiscal transparency in the countries of the region.
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