CORRUPTION, UNCERTAINTY AND GROWTH
Ratbek Dzhumashev ()
No 15-07, Monash Economics Working Papers from Monash University, Department of Economics
Corruption in the public sector erodes tax compliance and leads to higher tax evasion. Moreover, corrupt public officials abuse their public power to extort bribes from the private agents. In both types of interaction with the public sector, the private agents are bound to face uncertainty with respect to their disposable incomes. To analyse effects of this uncertainty, a stochastic dynamic growth model with the public sector is examined. It is shown that deterministic excessive red tape and corruption deteriorate the growth potential through income redistribution and public sector inefficiencies. Most importantly, it is demonstrated that the increase in corruption via higher uncertainty exerts adverse effects on capital accumulation, thus leading to lower growth rates.
Keywords: Corruption; growth; public goods; tax evasion; uncertainty (search for similar items in EconPapers)
JEL-codes: D72 D92 E20 E60 G11 H26 H41 O16 O41 (search for similar items in EconPapers)
Pages: 14 pages
New Economics Papers: this item is included in nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed
Downloads: (external link)
http://www.buseco.monash.edu.au/eco/research/paper ... ruptiondjumashev.pdf (application/pdf)
Working Paper: Corruption, uncertainty and growth (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:mos:moswps:2007-15
Ordering information: This working paper can be ordered from
https://www.monash.e ... esearch/publications
Access Statistics for this paper
More papers in Monash Economics Working Papers from Monash University, Department of Economics Department of Economics, Monash University, Victoria 3800, Australia. Contact information at EDIRC.
Bibliographic data for series maintained by Simon Angus ().