EconPapers    
Economics at your fingertips  
 

Bribes in the Business Cycles

Loris Rubini ()

Review of Economics and Institutions, 2019, vol. 10, issue 1

Abstract: Firms in countries with poor enforcement of property rights are often subject to extortions, which impact the business cycle. Unlike taxes, extortions respond endogenously to exogenous shocks, potentially affecting the volatility of investment, consumption, and GDP. In this study I introduce extortions into a real business cycles framework. The model features an intermediary that demands bribes from firms. In steady state, weak property rights induce higher bribes, lower GDP per capita, and lower investment to GDP ratios. Along the business cycle, they reduce the correlation between investment and output, and amplify the volatility of consumption and investment relative to output. I find this to be in line with the data. My framework accounts for the empirical finding that growth policies are usually more successful in countries with strong enforcement of property rights.

Keywords: property rights; extortions; bribes; aid and growth; governance and growth (search for similar items in EconPapers)
JEL-codes: O11 O43 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.rei.unipg.it/rei/article/view/283
Requires registration. Users must be registered and log in to access full text

Related works:
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:pia:review:v:10:y:2019:i:1:n:1

Access Statistics for this article

Review of Economics and Institutions is currently edited by Carlo Andrea Bollino

More articles in Review of Economics and Institutions from Università di Perugia Contact information at EDIRC.
Bibliographic data for series maintained by Ubaldo Pizzoli ().

 
Page updated 2021-02-26
Handle: RePEc:pia:review:v:10:y:2019:i:1:n:1