Growth and welfare effects of corruption penalties

• Type: Article in International Scientific Journal
• Date: 2022

Authors

Óscar Afonso (Author) FEP; Bandeira, AM (Author) Other; Lima, PG (Author) Other

Journal

Title: Economic Systems

Vol. 46 No. 3

ISSN: 0939-3625

Publisher: Elsevier

Indexing

ISI Web of Knowledge - 1 Citation

Scopus - 1 Citation

Other information

Authenticus ID: P-00X-16C

DOI: 10.1016/j.ecosys.2022.101004

Abstract (EN): This paper analyses the steady-state effect of business corruption penalties on economic growth, corruption and welfare. To that end, the baseline horizontal R&D growth model is extended to include corruption, which is generated in intermediate goods production. Taxation on corruption depresses profits in production but also wages, leading to labor being reallocated from production to R&D, and, therefore, to a higher economic growth rate. Moreover, it also reduces corruption and increases welfare if preferences towards a corruption-free environment are strong enough. The results are in line with the data observed for 15 EU countries.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 13