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Public debt accumulation and institutional quality: can corruption improve welfare?

Author

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  • Pierre Faure

    (Larefi, Université Montesquieu - Bordeaux 4)

Abstract

Corruption can enhance welfare in two complementary ways in a dynamic time inconsistency model: first, by mitigating the inflation bias of discretionary monetary policy; second, by reducing the loss due to the suboptimal distribution of distortions associated with public debt accumulation. The note thus proposes an original explanation of the existence of weak public governance in countries whose monetary regime lacks credibility.

Suggested Citation

  • Pierre Faure, 2011. "Public debt accumulation and institutional quality: can corruption improve welfare?," Economics Bulletin, AccessEcon, vol. 31(1), pages 17-28.
    • Handle: RePEc:ebl:ecbull:eb-10-00448
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    Cited by:

    1. Emin Efecan AKTAÅž, 2022. "Threshold impact of corruption on income inequality-social transfers nexus in Central and Eastern Europe," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 13, pages 73-98, October.
    2. 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.
    3. Garcia Fortuny, Judit, 2014. "The Effects of Corruption and Seigniorage on Growth and Inflation," Working Papers 2072/246961, Universitat Rovira i Virgili, Department of Economics.

    More about this item

    Keywords

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    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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