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  • 2014
  • Working Paper

Monitoring Public Procurement: Evidence from a Regression Discontinuity Design in Chile

By: Maria Paula Gerardino, Stephan Litschig and Dina D. Pomeranz
  • Language:English
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Abstract

The government is the biggest buyer in the economy of most countries. At the same time, the public procurement process if often thought to be fraught with corruption and malpractice. However, there is little evidence regarding the impact of audits aimed at reducing such malpractice. This paper investigates the effect of being audited on public entities' subsequent procurement practices in Chile. For identification, we exploit a scoring rule of the national auditing agency, which allows for regression discontinuity analysis. Our preliminary results show that the audits seem to lead to a temporary shift towards less transparent modalities of procurement. The share of the amount of total purchases through direct negotiations increases by around 20 percentage points, at the expense of the use of public auctions. The effect is most pronounced during months when the audit is taking place and disappears completely by the subsequent fiscal year. Since audits in Chile rarely happen in consecutive years, and since the audit typically only covers the most recent completed fiscal year, this time pattern of effects is consistent with public agents responding to a temporary drop in audit risk during the year of the audit.

Keywords

Procurement; Chile; Corruption; Public Finance; Public Procurement; Public Sector; Public Administration Industry; Chile

Citation

Gerardino, Maria Paula, Stephan Litschig, and Dina D. Pomeranz. "Monitoring Public Procurement: Evidence from a Regression Discontinuity Design in Chile." Working Paper, September 2014. (Latest version available upon request.)

More from the Authors

    • January 2017
    • Public Finance Review

    Impact Evaluation Methods in Public Economics: A Brief Introduction to Randomized Evaluations and Comparison with Other Methods

    By: Dina Pomeranz
    • November 2015
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    Field 2: Some Tips on Navigating Common Pitfalls when Working in Emerging Markets

    By: Dina D. Pomeranz, Samik Adhikari and Juan Ignacio Elorrieta
    • American Economic Review

    No Taxation Without Information: Deterrence and Self-Enforcement in the Value Added Tax

    By: Dina Pomeranz
More from the Authors
  • Impact Evaluation Methods in Public Economics: A Brief Introduction to Randomized Evaluations and Comparison with Other Methods By: Dina Pomeranz
  • Field 2: Some Tips on Navigating Common Pitfalls when Working in Emerging Markets By: Dina D. Pomeranz, Samik Adhikari and Juan Ignacio Elorrieta
  • No Taxation Without Information: Deterrence and Self-Enforcement in the Value Added Tax By: Dina Pomeranz
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