A Theory of the Corrupt Keynesian
AbstractWe evaluate the impact of real business cycle shocks on corruption and economic policy in a model of entry regulation in a representative democracy. We .nd that corruption is procyclical and regulation policy is counter-cyclical. Corrupt politicians engage in excessive stabilization of aggregate fluctuations and behave as if they were Keynesian. We also find that business cycle shocks can induce political instability with politicians losing office in recessions.
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Bibliographic InfoPaper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0861.
Date of creation: Dec 2008
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Corruption; entry regulation; performance voting; business cycles.;
Find related papers by JEL classification:
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-02-07 (All new papers)
- NEP-CDM-2009-02-07 (Collective Decision-Making)
- NEP-DGE-2009-02-07 (Dynamic General Equilibrium)
- NEP-HPE-2009-02-07 (History & Philosophy of Economics)
- NEP-LAW-2009-02-07 (Law & Economics)
- NEP-MAC-2009-02-07 (Macroeconomics)
- NEP-PKE-2009-02-07 (Post Keynesian Economics)
- NEP-POL-2009-02-07 (Positive Political Economics)
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