A note on poor-institution traps in international fiscal policy games
This note explores the link between the effort level to strengthen institutional quality and the nature of the fiscal policy game among interdependent economies plagued by corruption. Every country has a lower incentive to improve public governance when the effort made abroad to remedy institutional deficiencies becomes weaker. More importantly, the model highlights a possible trade-off between fighting corruption in interrelated developing countries and promoting fiscal policy coordination among them: cooperation goes together with the acceptance of more corruption. It follows that poor-institution traps can be Pareto-improving.
Volume (Year): 31 (2011)
Issue (Month): 1 ()
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- Toke Aidt & Jayasri Dutta & Vania Sena, 2006.
"Governance Regimes, Corruption and Growth: Theory and Evidence,"
15_2006, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
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- Hefeker, Carsten, 2008.
"Taxation, Corruption and the Exchange Rate Regime,"
Proceedings of the German Development Economics Conference, Zurich 2008
17, Verein für Socialpolitik, Research Committee Development Economics.
- Carsten Hefeker, 2009. "Taxation, Corruption and the Exchange Rate Regime," MAGKS Papers on Economics 200911, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
- Carsten Hefeker, 2009. "Taxation, Corruption and the Exchange Rate Regime," CESifo Working Paper Series 2561, CESifo Group Munich.
- Hefeker, Carsten, 2008. "Taxation, corruption and the exchange rate regime," HWWI Research Papers 2-12, Hamburg Institute of International Economics (HWWI).
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