Public Debt Accumulation and Institutional Quality: Can Corruption Improve Welfare?
AbstractWe explore the consequences of bad governance and corruption for public debt and welfare in a model of policymaking with time inconsistency. A decrease in institutional quality is supposed to adversely affect government revenue. The main point of this paper is that corruption can enhance welfare in two ways: first, by mitigating the inflationary bias of discretionary monetary policy; second, by reducing the loss due to the suboptimal distribution of distortions associated with debt accumulation. The paper thus invokes the lack of interest for explaining the prevalence of corruption in countries with low institutional quality that encounter a credibility problem in monetary management.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by HAL in its series Working Papers with number hal-00616572.
Date of creation: 01 Jun 2009
Date of revision:
Note: View the original document on HAL open archive server: http://hal.archives-ouvertes.fr/hal-00616572/en/
Contact details of provider:
Web page: http://hal.archives-ouvertes.fr/
Corruption; fiscal and monetary policy; governance; public debt;
Other versions of this item:
- Pierre Faure, 2011. "Public debt accumulation and institutional quality: can corruption improve welfare?," Economics Bulletin, AccessEcon, vol. 31(1), pages 17-28.
- E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
- H6 - Public Economics - - National Budget, Deficit, and Debt
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ciocchini, Francisco & Durbin, Erik & Ng, David T. C., 2003.
"Does corruption increase emerging market bond spreads?,"
Journal of Economics and Business,
Elsevier, vol. 55(5-6), pages 503-528.
- Ciocchini, Francisco & Durbin, Erik & Ng, David T.C., 2003. "Does Corruption Increase Emerging Market Bond Spreads?," Working Papers 127179, Cornell University, Department of Applied Economics and Management.
- Huang, Haizhou & Wei, Shang-Jin, 2006.
"Monetary policies for developing countries: The role of institutional quality,"
Journal of International Economics,
Elsevier, vol. 70(1), pages 239-252, September.
- Huang, Haizhou & Wei, Shang-Jin, 2005. "Monetary Policies for Developing Countries: The Role of Institutional Quality," CEPR Discussion Papers 4911, C.E.P.R. Discussion Papers.
- Alesina, Alberto & Tabellini, Guido, 1987. "Rules and Discretion with Noncoordinated Monetary and Fiscal Policies," Economic Inquiry, Western Economic Association International, vol. 25(4), pages 619-30, October.
- Ferré Carracedo, Montserrat & García Fortuny, Judit & Manzano, Carolina, 2013. "The Conservativeness of the Central Bank when Institutional Quality is Poor," Working Papers 2072/222198, Universitat Rovira i Virgili, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.