Corruption, tax evasion, and seigniorage in a monetary endogenous growth model

Réda Marakbi and Patrick Villieu

Journal of Public Economic Theory, 2020, vol. 22, issue 6, 2019-2050

Abstract: In this paper, we reassess the link between corruption, economic growth, and inflation. To this end, we build an endogenous growth model with transaction costs in which a corruption sector allows households evading from taxation. Several results emerge. First, seigniorage acts as a tax on corruption and therefore allows reducing the aggregate level of corruption in equilibrium. Second, corruption increases both the growth‐maximizing and the welfare‐maximizing seigniorage rate. Third, corruption can be identified as an autonomous channel of nonsuperneutrality of money. Fourth, our model exhibits a U‐shaped relation between corruption and inflation, contrasting with previous literature. On this last point, an empirical investigation based on a structural threshold regression framework confirms the predictions of the theoretical model.

Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://doi.org/10.1111/jpet.12468

Related works:
Working Paper: Corruption, tax evasion, and seigniorage in a monetary endogenous growth model (2020)
Working Paper: Corruption, tax evasion, and seigniorage in a monetary endogenous growth model (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jpbect:v:22:y:2020:i:6:p:2019-2050

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1097-3923

Access Statistics for this article

Journal of Public Economic Theory is currently edited by Rabah Amir, Gareth Myles and Myrna Wooders

More articles in Journal of Public Economic Theory from Association for Public Economic Theory Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().