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Can corruption favour growth via the composition of government spending?

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Author Info

  • Sugata Ghosh

    ()
    (Brunel University)

  • Andros Gregoriou

    ()
    (University of East Anglia)

Abstract

In an endogenous growth model with two public goods, we analytically derive the optimal composition of government spending in the presence of corruption. Although corruption results in a loss of productivity per se, an increase in corruption in the category of public spending that is harmed relatively more by corruption could have a favourable effect on growth, as it would encourage a benevolent government to divert spending towards the public good that is more productive, net of corruption.

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File URL: http://www.accessecon.com/Pubs/EB/2010/Volume30/EB-10-V30-I3-P208.pdf
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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 30 (2010)
Issue (Month): 3 ()
Pages: 2270-2278

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Handle: RePEc:ebl:ecbull:eb-10-00066

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Related research

Keywords: Corruption; optimal composition of government spending; endogenous growth.;

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  1. Pierre-Guillaume Méon & Khalid Sekkat, 2005. "Does corruption grease or sand the wheels of growth?," ULB Institutional Repository 2013/7364, ULB -- Universite Libre de Bruxelles.
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Cited by:
  1. El Anshasy, Amany A. & Katsaiti, Marina-Selini, 2013. "Natural resources and fiscal performance: Does good governance matter?," Journal of Macroeconomics, Elsevier, vol. 37(C), pages 285-298.

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