Djumashev, R (2007): Corruption, uncertainty and growth.
Preview |
PDF
MPRA_paper_3716.pdf Download (322kB) | Preview |
Abstract
Corruption in the public sector erodes tax compliance and leads to higher tax evasion. Moreover, corrupt public officials abuse their public power to extort bribes from the private agents. In both types of interaction with the public sector, the private agents are bound to face uncertainty with respect to their disposable incomes. To analyse effects of this uncertainty, a stochastic dynamic growth model with the public sector is examined. It is shown that deterministic excessive red tape and corruption deteriorate the growth potential through income redistribution and public sector inefficiencies. Most importantly, it is demonstrated that the increase in corruption via higher uncertainty exerts adverse effects on capital accumulation, thus leading to lower growth rates.
Item Type: | MPRA Paper |
---|---|
Original Title: | Corruption, uncertainty and growth |
Language: | English |
Keywords: | Corruption; growth; public goods; tax evasion; uncertainty |
Subjects: | E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E20 - General O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O41 - One, Two, and Multisector Growth Models D - Microeconomics > D9 - Intertemporal Choice > D92 - Intertemporal Firm Choice, Investment, Capacity, and Financing D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E60 - General H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H26 - Tax Evasion and Avoidance G - Financial Economics > G1 - General Financial Markets > G11 - Portfolio Choice ; Investment Decisions H - Public Economics > H4 - Publicly Provided Goods > H41 - Public Goods |
Item ID: | 3716 |
Depositing User: | Ratbek Dzhumashev |
Date Deposited: | 26 Jun 2007 |
Last Modified: | 28 Sep 2019 10:26 |
References: | Acconcia, A. and R. d’Amato (2006). Endogenous corruption and tax evasion in a dynamic model. Aiyagari, S. R. (1994). Uninsured idiosyncratic risk and aggregate saving. Quarterly Journal of Economics 109, 659–684. Aizenman, J. and N. Marion (1993). Policy uncertainty, persistence, and growth. Review of International Economics 1, 145–163. Aizenman, J. and N. Marion (1999). Volatility and investment: Interpreting evidence from developing countries. Economica 66(262), 157–179. Angeletos, G.-M. (2005). Uninsured idiosyncratic investment risk and aggregate saving. Angeletos, G.-M. and L.-E. Calvet (2005). Incomplete-market dynamics in a neoclassical production economy. Journal of Mathematical Economics 41(4-5), 407–38. Barelli, P. and S. d. A. Pessôa. A model of capital accumulation and rent seeking. Barreto, R. A. (2000). Endogenous corruption in a neoclassical growth model. European Economic Review 44(1), 35–60. Barro, R. J. (1990). Government spending in a simple model of endogenous growth. The Journal of Political Economy 98(5 Part 2), S103–S125. Bewley, T. (1977). The permanent income hypothesis: A theoretical formulation. Journal of Economic Theory 16, 252–292. Calvet, L. (2001). Incomplete markets and volatility. Journal of Economic Theory 98, 295–338. Campos, J. E. L. (2001). Corruption : the boom and bust of East Asia. Quezon City: Ateneo de Manila University Press. Chang, F.-R. (2004). Stochastic optimization in continuous time. Cambridge, UK ; New York: Cambridge University Press. Denizer, C., M. Iyugun, and A. Owen (2000). Finance and macroeconomic volatility. Dixit, A. K. and R. S. Pindyck (1994). Investment under uncertainty. Princeton: Princeton University Press. Eaton, J. (1981). Fiscal policy, inflation, and the accumulation of risky capital. Review of Economic Studies 48, 435–445. Eichhorn, C. (2006). Optimal Policies in the Presence of Tax Evasion. Ph. D. thesis, Ludwig-Maximilians University. Gertler, M. and E. Grinols (1982). Monetary randomness and investment. Journal of Monetary Economics 10, 239–258. Grier, K. B. and G. Tullock (1989). An empirical analysis of cross-national economic growth, 1951-1980. Journal of Monetary Economics 24, 48–69. Grinols, E. and S. Turnovsky (1993). Risk, the financial market, and macroeconomic equilibrium. Journal of Economic Dynamics and Control 17, 1–36. Grinols, E. and S. Turnovsky (1998). Risk, optimal government finance and monetary policies in a growing economy. Economica 65(259), 401–427. Guriev, S. (2004). Red tape and corruption. Journal of Development Economics 73, 489–504. Huggett, M. (1997). The one-sector growth model with idiosyncratic shocks. Journal of Monetary Economics 39, 385–403. Huntington, S. P. (1968). Political Order in Changing Societies. New Haven, CT: Yale University Press. Kormendi, R. and P. Meguire (1985). Macroeconomic determinants of growth: Cross-country evidence. Journal of Monetary Economics 16, 141–163. Krusell, P. and A. Smith (1998). Income and wealth heterogeneity in the macroeconomy. Journal of Political Economy 106(5), 867–896. Leff, N. (1964). Economic development through bureaucratic corruption. American Behavioral Scientist 8(3), 8–14. Lin, W.-Z. and C.-C. Yang (2001). A dynamic portfolio choice model of tax evasion: Comparative statics of tax rates and its implication for economic growth. Journal of Economic Dynamics and Control 25, 1827–184. Lui, F. T. (1985). An equilibrium queuing model of bribery. Journal of Political Economy, 760–781. Lui, F. T. (1996). Three aspects of corruption. Contemporary Economic Policy 14(3), 26–29. Mauro, P. (1995). Corruption and growth. Quarterly Journal of Economics 110, 681–712. Mauro, P. (1998). Corruption and the composition of government expenditure. Journal of Public Economics 69(2), 263–279. Mauro, P. (2004). The persistence of corruption and slow economic growth. Imf Staff Papers 51(1), 1–18. Polinsky, A. M. and S. Shavell (2001). Corruption and optimal law enforcement. Journal of Public Economics 81, 1–24. Ramey, G. and V. A. Ramey (1995). Cross country evidence on the link between volatility and growth. American Economic Review 85, 1138–1151. Rivera-Baitiz, F. L. (2002). Governance, and economic growth: Theory and evidence. Review of Development Economics 6(2), 225–247. Rose-Ackerman, S. (1998). Corruption and Development. World Bank. Rose-Ackerman, S. (1999). Corruption and government : causes, consequences, and reform. Cambridge: Cambridge University Press. Rose-Ackerman, S. (2002). Grand corruption and the ethics of global business. Journal of Banking & Finance 26(9), 1889–1918. Rose-Ackerman, S. (2004). Corruption. Kluwer Academic. Shleifer, A. and R. W. Vishny (1993). Corruption. The Quarterly Journal of Economics 108(3), 599–617. Tsai, S.-Y., C.-C. Chen, J. Yeh, E.-K. Dawson, E. Stephenson (1997). The link between volatility and growth: Evidence from the states. Economic Letters 55(3), 365–369. |
URI: | https://mpra.ub.uni-muenchen.de/id/eprint/3716 |