Corruption, governments’ debts, trade, and global growth

Wei-Bin Zhang

Theoretical and Applied Economics, 2018, vol. XXV, issue 2(615), Summer, 27-50

Abstract: The purpose of the study is to examine interdependence between national growth, global growth, income and wealth distributions between workers and officials and between countries, government’s debts, and corruption. We are especially concerned with how corruption in any economy can affect global trade pattern and global economic growth. The model is constructed within a dynamic general equilibrium framework on the basis of the Solow growth model, the Oniki- Uzawa-two-country global growth model, Diamond’s growth model with government’s debt, and Zhang’s model with corruption. The dynamic interdependence between endogenous labor supply, government’s debt, and corruption for a-country world economy is described by nonlinear differential equations. We simulate the model and conduct comparative dynamic analyses conducted for a 3-country global economy. We get many insights from comparative dynamic analyses. For instance, if they become more corrupt, the officials in the world become richer, consume more, and get more corrupt incomes. All the workers have less wealth, consume less, and work almost the same hours. The output levels are slightly affected and each country employs more capital as global wealth is increased. Each government has slightly less debt and spends more.

Keywords: corruption; trade pattern; government’s debts; tradable and non-tradable; economic growth. (search for similar items in EconPapers)
Date: 2018
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