Public debt accumulation and institutional quality: can corruption improve welfare?

Pierre-Henri Faure

Economics Bulletin, 2011, vol. 31, issue 1, 17-28

Abstract: Corruption can enhance welfare in two complementary ways in a dynamic time inconsistency model: first, by mitigating the inflation bias of discretionary monetary policy; second, by reducing the loss due to the suboptimal distribution of distortions associated with public debt accumulation. The note thus proposes an original explanation of the existence of weak public governance in countries whose monetary regime lacks credibility.

Keywords: Corruption; fiscal and monetary policy; governance; public debt (search for similar items in EconPapers)
JEL-codes: E6 H6 (search for similar items in EconPapers)
Date: 2011-01-04
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Public Debt Accumulation and Institutional Quality: Can Corruption Improve Welfare? (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-10-00448

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