openness, and hence safeguards the democratic legitimacy of independent central banks (Geraats 2002b). It is essential to have openness as a part of public governance (Stiglitz 1999).

This paper focuses on economic transparency defined as availability of and access to economic information and statistical data (Geraats 2002b). Transparency of statistical data relates to open access data and information accountability. There is a healthy literature on the relationship between data transparency and macroeconomic and financial factors, especially sovereign bond spreads and institutional quality.

Clare and Courtenay (2001) find that transparency increases predictability of monetary policy. Glennerster and Shin (2008) examine whether greater transparency (measured by IMF binary transparency data) reduces the cost of borrowing in sovereign bond markets. They find that there are diminishing marginal benefits of transparency when a country has smaller and less liquid debt markets. Alfaro and Kanczuk (2019), on the other hand, examine how undisclosed debt affects debt sustainability by modeling international investors’ behavior with and without debt transparency. They find that disclosure of nontraditional debt (their proxy of debt transparency) increases welfare for the borrowing countries and reduces debt sustainability. Horn, Reinhart and Trebesch (2019) build a new data set for China’s total loans and grants to 152 countries and find that the lack disclosure in debt data leads to mispricing sovereign bonds and associated default risks.<sup>2</sup> On a related literature, Gelos and Wei (2002) investigate the impact of transparency on the behavior of international investment funds and explore whether a developing country’s opacity explains mutual funds’ investment position. Their findings suggest that international investors prefer more transparent markets to invest while the degree of herding among funds is greater in opaque markets. Tebaldi et al. (2018) examine the determinants of sovereign bond spreads for emerging markets from 1994 to 2014 and they conclude that the main determinants are GDP growth, real effective exchange rates and political liberalization. Presbitero et al. (2016) examine drivers of sovereign bond issuances in developing countries from 1995 to 2014, and find that countries with higher public debt and weak governance are less likely to issue sovereign bond debt. Also, countries with sound external positions, strong economic growth and lower public debt tend to issue sovereign bonds at a lower premium than other countries. Finally, global conditions matter for bond issuances as countries issue more in the periods of greater liquidity, high commodity prices, and when primary spreads are lower.

Berliner (2014) studies the impact of the freedom of information (FOI) laws, which institutionalize transparency, and finds that FOI improves the credibility of policy makers and lowers corruption. Transparency, associated with better socioeconomic and human development, leads to higher competitiveness and lower corruption (Bellver and Kaufmann, 2005). Geraats (2001) suggests that economic transparency depends on a country’s institutional framework. The fundamental solution

> 2 We know little about China’s overseas lending behavior because the country, as a non-Paris Club lender, is not obligated to report on its official lending. This poses a serious challenge to debt sustainability analyses for borrowing countries, as opacity masks the stock and composition of debt.

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