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The economic implications of corruption dynamics

Author

Listed:
  • Marcelo Arbex

    (University of Windsor)

  • Marcio Correa

    (Federal University of Ceara (CAEN))

  • Marcos Magalhaes

    (Federal University of Ceara (CAEN))

Abstract

Corruption is not a static phenomenon; it evolves over time and varies across countries. Using a second-order autoregressive model, we examine how corruption shocks influence key economic variables. Our findings indicate that persistent corruption significantly reduces capital stock, consumption, and wages. Moreover, corruption shocks have long-term repercussions, with high-corruption economies exhibiting weakened performance marked by increased working hours, lower wages, and marginally reduced interest rates.

Suggested Citation

  • Marcelo Arbex & Marcio Correa & Marcos Magalhaes, 2025. "The economic implications of corruption dynamics," Economics Bulletin, AccessEcon, vol. 45(1), pages 418-433.
    • Handle: RePEc:ebl:ecbull:eb-25-00020
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Corruption; Tax Evasion; Growth.;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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