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Openness, Bureaucratic Corruption and Public Policy in an Endogenous Growth Model

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Author Info
Rangan Gupta () (Department of Economics, University of Pretoria)
Emmanuel Ziramba () (Department of Economics, University of South Africa)

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Abstract

In this paper, we develop a dynamic general equilibrium overlapping generations monetary endogenous growth model of a financially repressed small open economy characterized by bureaucratic corruption, and, in turn, analyze optimal policy decisions of the government following an increase in the degree of corruption. As suggested in the empirical literature, we find that increases in the degree of corruption should ideally result in an increase in the ratio of seigniorage to total revenue, as an optimal response of the benevolent government. In addition, higher degrees of corruption are also found to be accompanied by higher levels of financial repression.

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Publisher Info
Paper provided by University of Pretoria, Department of Economics in its series Working Papers with number 200817.

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Length: 18 pages
Date of creation: Jun 2008
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Handle: RePEc:pre:wpaper:200817

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Related research
Keywords: Bureaucratic Corruption Macroeconomic Policy Openness

Other versions of this item:

Find related papers by JEL classification:
D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization
F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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References listed on IDEAS
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.:
  1. Rangan Gupta & Emmanuel Ziramba, 2008. "Tax Evasion and Financial Repression: A Reconsideration Using Endogenous Growth Models," Working Papers 200808, University of Pretoria, Department of Economics.
  2. Rangan Gupta, 2004. "Costly State Monitoring and Reserve Requirements," Working papers 2004-33, University of Connecticut, Department of Economics, revised Jul 2005. [Downloadable!]
  3. Joseph H. Haslag & Jahyeong Koo, 1999. "Financial repression, financial development and economic growth," Working Papers 99-02, Federal Reserve Bank of Dallas. [Downloadable!]
  4. Rangan Gupta, 2005. "Tax Evasion and Financial Repression," Working papers 2005-34, University of Connecticut, Department of Economics, revised Jun 2007. [Downloadable!]
  5. Cukierman, Alex & Edwards, Sebastian & Tabellini, Guido, 1992. "Seigniorage and Political Instability," American Economic Review, American Economic Association, vol. 82(3), pages 537-55, June. [Downloadable!] (restricted)
    Other versions:
  6. Marco Espinosa & Chong K. Yip, 1996. "An endogenous growth model of money, banking, and financial repression," Working Paper 96-4, Federal Reserve Bank of Atlanta. [Downloadable!]
  7. Diamond, Peter & Yellin, Joel, 1990. "Inventories and Money Holdings in a Search Economy," Econometrica, Econometric Society, vol. 58(4), pages 929-50, July. [Downloadable!] (restricted)
  8. Rangan Gupta, 2006. "Asymmetric Information, Tax Evasion and Alternative Instruments of Government Revenue," The Icfai Journal of Monetary Economics, Icfai Press, vol. 0(1), pages 75 - 89, February.
    Other versions:
  9. Christian Zimmermann, 1994. "Technology Innovations and the Volatility of Output: An International Perspective," Cahiers de recherche CREFE / CREFE Working Papers 34, CREFE, Université du Québec à Montréal. [Downloadable!]
  10. Bacchetta, Philippe & Caminal, Ramon, 1992. "Optimal seigniorage and financial liberalization," Journal of International Money and Finance, Elsevier, vol. 11(6), pages 518-538, December. [Downloadable!] (restricted)
  11. Di Giorgio, Giorgio, 1999. "Financial development and reserve requirements," Journal of Banking & Finance, Elsevier, vol. 23(7), pages 1031-1041, July. [Downloadable!] (restricted)
  12. Al-Marhubi, Fahim A., 2000. "Corruption and inflation," Economics Letters, Elsevier, vol. 66(2), pages 199-202, February. [Downloadable!] (restricted)
  13. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S103-26, October. [Downloadable!] (restricted)
    Other versions:
  14. Basu, Parantap, 2001. "Reserve Ratio, Seigniorage and Growth," Journal of Macroeconomics, Elsevier, vol. 23(3), pages 397-416, July. [Downloadable!] (restricted)
  15. Been-Lon Chen & Yeong-Yuh Chiang & Ping Wang, 2000. "Credit Market Imperfections, Financial Activity and Economic Growth," Working Papers 0020, Department of Economics, Vanderbilt University. [Downloadable!]
  16. Roubini, Nouriel & Sala-i-Martin, Xavier, 1992. "Financial repression and economic growth," Journal of Development Economics, Elsevier, vol. 39(1), pages 5-30, July. [Downloadable!] (restricted)
    Other versions:
  17. Joseph H. Haslag & Eric R. Young, 1998. "Money Creation, Reserve Requirements, and Seigniorage," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(3), pages 677-698, July. [Downloadable!] (restricted)
    Other versions:
  18. Haslag, Joseph H. & Hein, Scott E., 1995. "Does it matter how monetary policy is implemented?," Journal of Monetary Economics, Elsevier, vol. 35(2), pages 359-386, April. [Downloadable!] (restricted)
    Other versions:
  19. Haslag, Joseph H, 1998. "Monetary Policy, Banking, and Growth," Economic Inquiry, Oxford University Press, vol. 36(3), pages 489-500, July.
    Other versions:
  20. Rangan Gupta, 2008. "Currency Substitution and Financial Repression," Working Papers 200806, University of Pretoria, Department of Economics. [Downloadable!]
  21. 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. [Downloadable!] (restricted)
  22. Bhattacharya, Joydeep & Haslag, J., 2002. "On the use of the Inflation Tax when Non-Distortionary Taxes are Available," Staff General Research Papers 5247, Iowa State University, Department of Economics.
    Other versions:
  23. Roubini, Nouriel & Sala-i-Martin, Xavier, 1995. "A growth model of inflation, tax evasion, and financial repression," Journal of Monetary Economics, Elsevier, vol. 35(2), pages 275-301, April. [Downloadable!] (restricted)
    Other versions:
  24. V.V. Chari & Larry E. Jones & Rodolfo E. Manuelli, 1995. "The growth effects of monetary policy," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Fall, pages 18-32. [Downloadable!]
Full references

Cited by:
(explanations, 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.)

  1. Rangan Gupta & Emmanuel Ziramba, 2008. "Optimal Public Policy with Endogenous Mortality," Working Papers 200829, University of Pretoria, Department of Economics. [Downloadable!]
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