The economic implications of corruption dynamics

Marcelo Arbex, Marcio Correa () and Marcos Renan Magalhães
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Marcio Correa: Federal University of Ceara (CAEN)

Economics Bulletin, 2025, vol. 45, issue 1, 418 - 433

Abstract: Corruption is not a static phenomenon; it evolves over time and varies across countries. Using a second-order autoregressive model, we examine how corruption shocks influence key economic variables. Our findings indicate that persistent corruption significantly reduces capital stock, consumption, and wages. Moreover, corruption shocks have long-term repercussions, with high-corruption economies exhibiting weakened performance marked by increased working hours, lower wages, and marginally reduced interest rates.

Keywords: Corruption; Tax Evasion; Growth. (search for similar items in EconPapers)
JEL-codes: E2 E3 (search for similar items in EconPapers)
Date: 2025-03-30
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