A note on poor-institution traps in international fiscal policy games
AbstractThis note explores the link between the effort level to strengthen institutional quality and the nature of the fiscal policy game among interdependent economies plagued by corruption. Every country has a lower incentive to improve public governance when the effort made abroad to remedy institutional deficiencies becomes weaker. More importantly, the model highlights a possible trade-off between fighting corruption in interrelated developing countries and promoting fiscal policy coordination among them: cooperation goes together with the acceptance of more corruption. It follows that poor-institution traps can be Pareto-improving.
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Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 31 (2011)
Issue (Month): 1 ()
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Corruption; Fiscal policy; International coordination;
Other versions of this item:
- Pierre-Henri Faure, 2011. "A note on poor-institution traps in international fiscal policy game," Post-Print hal-00610540, HAL.
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
- D7 - Microeconomics - - Analysis of Collective Decision-Making
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