Corruption and production: a policy analysis
Abstract� This paper analyzes the relation existing between corruption, monitoring and output in an economy. By solving a dynamic game we prove that equilibrium output is a non-linear upper-hemicontinuous function (MP function) of the monitoring level implemented by the State on corruption, presenting 3 different equilibrium scenarios. According to our model, we analyze the optimal strategy depending on the policy objective of the State and we prove that if the State is budget constrained the optimal policy can lead the economy to an equilibrium with widespread corruption and maximum production.
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Bibliographic InfoPaper provided by Macerata University, Department of Finance and Economic Sciences in its series Working Papers with number 22-2004.
Date of creation: Oct 2004
Date of revision: Oct 2008
Publication status: Published in Economic Modelling, Vol. 23, N. 4 pp 622-637
Policy analysis; Equilibrium production; Corruption; Dynamic game;
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