Corruption, taxation and economic growth: theory and evidence
AbstractIn this paper, we analyze the interaction between corruption, taxation and economic growth. Our contributions are twofold. Theoretically, in an endogenous growth model, we introduce corruption in two different ways: corruption in the public expenditure and corruption in the public revenue. We show two opposing effects. Under certain conditions, corruption can affect growth rate positively but it can also exert a negative effect via fiscal revenue. Not only does it tend to make the tax rate, which maximizes the long run growth rate sub-optimal, but it can also create distortions that can lead to excessive tax rates harmful to growth. The empirical analyses are based on non parametric estimates as well as econometric investigations. Our results support the assumption of a non linear relationship between public resources and growth. Interactions between public resources and institutional variables evidence the following the results: (i) the more countries are corrupt the stronger the negative effects of taxation on the growth (ii) Once the negative effects of corruption are accounted
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Bibliographic InfoPaper provided by CERDI in its series Working Papers with number 200829.
Date of creation: 2008
Date of revision:
corruption; taxation; growth; developing countries;
Other versions of this item:
- Gbewopo Attila, 2011. "Corruption, taxation and economic growth: theory and evidence," Working Papers halshs-00556668, HAL.
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- repec:hal:cesptp:halshs-00129741 is not listed on IDEAS
- Pierre-Guillaume Méon & Laurent Weill, 2010.
"Is corruption an efficient grease?,"
ULB Institutional Repository
2013/92603, ULB -- Universite Libre de Bruxelles.
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- Pierre-Guillaume Méon & Laurent Weill, 2008. "Is Corruption an Efficient Grease ?," Working Papers of LaRGE Research Center 2008-06, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
- Méon, Pierre-Guillaume & Weill, Laurent, 2008. "Is corruption an efficient grease?," BOFIT Discussion Papers 20/2008, Bank of Finland, Institute for Economies in Transition.
- Pierre-Guillaume Méon & Khalid Sekkat, 2005.
"Does corruption grease or sand the wheels of growth?,"
Springer, vol. 122(1), pages 69-97, January.
- 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.
- David de la Croix & Clara Delavallade, 2007.
"Growth, Public Investment and Corruption with Failing Institutions,"
61, ECINEQ, Society for the Study of Economic Inequality.
- David Croix & Clara Delavallade, 2009. "Growth, public investment and corruption with failing institutions," Economics of Governance, Springer, vol. 10(3), pages 187-219, July.
- David, DE LA CROIX & Clara, DELAVALLADE, 2006. "Growth, public investment and corruption with failing institutions," Discussion Papers (ECON - DÃ©partement des Sciences Economiques) 2006057, Université catholique de Louvain, Département des Sciences Economiques.
- DE LA CROIX, David & DELAVALLADE, Clara, 2006. "Growth, public investment and corruption with failing institutions," CORE Discussion Papers 2006101, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- David De la Croix & Clara Delavallade, 2006. "Growth, public investment and corruption with failing institutions," Cahiers de la Maison des Sciences Economiques v06078a, Université Panthéon-Sorbonne (Paris 1).
- DE LA CROIX, David & DELAVALLADE, Clara, . "Growth, public investment and corruption with failing institutions," CORE Discussion Papers RP -2107, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Del Monte, Alfredo & Papagni, Erasmo, 2001. "Public expenditure, corruption, and economic growth: the case of Italy," European Journal of Political Economy, Elsevier, vol. 17(1), pages 1-16, March.
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