Does Size Matter? Scale, Corruption and Uncertainty
AbstractWe study the role of the size of the economy in mitigating the impact of public sector corruption on economic development. The analysis is based on a dynamic general equilibrium model in which growth occurs endogenously through the invention and manufacture of new intermediate goods that are used in the production of output. Potential innovators decide to enter the market considering the fraction of future profits that may be lost to corruption. We find that depending on the predictability of bribes, the size of the economy may be an important factor in determining the effects of corruption on innovation and economic growth.
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Bibliographic InfoPaper provided by Centre for Dynamic Macroeconomic Analysis in its series CDMA Working Paper Series with number 201207.
Date of creation: 01 Jul 2012
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Corruption; population size; innovation; growth; uncertainty;
Find related papers by JEL classification:
- D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- 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-2012-09-30 (All new papers)
- NEP-DGE-2012-09-30 (Dynamic General Equilibrium)
- NEP-INO-2012-09-30 (Innovation)
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