Corruption and Stock Market Prices: A General-Equilibrium Approach

Aleksandar Vasilev

EconStor Open Access Articles and Book Chapters, 2025, vol. XI, issue 2, 7-18

Abstract: This paper utilizes an otherwise standard micro-founded general-equilibrium setup, which is augmented with an output-evasion mechanism to assess the magnitude of corruption, and the effect of corruption on stock prices. The model is calibrated to Bulgaria after the introduction of the currency board (1999-2019), as one of the poorest EU states. A computational experiment performed within this setup predicts that corruption has a negative effect on stock prices. Spending on law and order, and better bureaucratic quality lower corruption, and increase stock prices.

Keywords: corruption; stock market (search for similar items in EconPapers)
JEL-codes: E32 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:espost:341031

DOI: 10.14505/jmef.v11.2(21).01

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