Long-run implications of government budget leakage in a Solow-Swan economy: An evolutionary game approach

Gilberto Lima and Jaylson Silveira ()

No 2024_29, Working Papers, Department of Economics from University of São Paulo (FEA-USP)

Abstract: There is mounting evidence of persistent capture or drainage of government budgetary resources through unlawful means by individuals in the rest of the economy. This paper develops a formal analytical framework in which such persistence arises as a stable evolutionary equilibrium configuration. Also in keeping with the empirical evidence, this evolutionary equilibrium is characterized by behavioral heterogeneity across decision makers who periodically choose whether or not to engage in illegal activities of capture of government resources. A key implication is that the macrodynamics of the capital stock in per capita terms and the per capita income are crucially affected by the frequency of capturing behavior in the economy in a complex way.

Keywords: Economic growth; Solow-Swan model; evolutionary games (search for similar items in EconPapers)
JEL-codes: C73 E13 (search for similar items in EconPapers)
Date: 2024-12-03
New Economics Papers: this item is included in nep-evo, nep-gro and nep-gth
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