IDEAS home Printed from https://ideas.repec.org/a/spr/qualqt/v49y2015i6p2387-2410.html
   My bibliography  Save this article

Multiple equilibria in a discrete time growth model with corruption in public procurement

Author

Listed:
  • Serena Brianzoni
  • Raffaella Coppier
  • Elisabetta Michetti

Abstract

We study the relationship between corruption in public procurement and economic growth within the Solow framework in discrete time, while assuming that the public good is an input in the productive process and that the State fixes a monitoring level on corruption depending on the tax revenues. The resulting model is a two-dimensional, continuous and piecewise smooth dynamic system which describes the evolution of the capital per capita and that of the corruption level. We prove that the model admits multiple equilibria: their stability and the structure of their basins is studied. We also present numerical simulations for economic meaningful parameter values, useful to explain the role of parameters in the long–run path of the model. Our study aims at demonstrating that stable equilibria with positive corruption may exist (according to empirical evidence), even though the State may reduce corruption by increasing the wage of the bureaucrat or by increasing the amount of tax revenues used to monitor corruption. Copyright Springer Science+Business Media Dordrecht 2015

Suggested Citation

  • Serena Brianzoni & Raffaella Coppier & Elisabetta Michetti, 2015. "Multiple equilibria in a discrete time growth model with corruption in public procurement," Quality & Quantity: International Journal of Methodology, Springer, vol. 49(6), pages 2387-2410, November.
    • Handle: RePEc:spr:qualqt:v:49:y:2015:i:6:p:2387-2410
    DOI: 10.1007/s11135-014-0119-3
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11135-014-0119-3
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11135-014-0119-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Bajari, Patrick & Tadelis, Steven, 2001. "Incentives versus Transaction Costs: A Theory of Procurement Contracts," RAND Journal of Economics, The RAND Corporation, vol. 32(3), pages 387-407, Autumn.
    2. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    3. Maurizio Bovi & Roy Cerqueti, 2014. "A quantitative view on policymakers’ goal, institutions and tax evasion," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(3), pages 1493-1510, May.
    4. Cerqueti, Roy & Coppier, Raffaella, 2011. "Economic growth, corruption and tax evasion," Economic Modelling, Elsevier, vol. 28(1-2), pages 489-500, January.
    5. Brianzoni Serena & Mammana Cristiana & Michetti Elisabetta, 2007. "Complex Dynamics in the Neoclassical Growth Model with Differential Savings and Non-Constant Labor Force Growth," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 11(3), pages 1-19, September.
    6. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
    7. Cerqueti, Roy & Coppier, Raffaella, 2009. "Tax revenues, fiscal corruption and "shame" costs," Economic Modelling, Elsevier, vol. 26(6), pages 1239-1244, November.
    8. Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1991. "The Allocation of Talent: Implications for Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 503-530.
    9. Tanzi,Vito & Schuknecht,Ludger, 2000. "Public Spending in the 20th Century," Cambridge Books, Cambridge University Press, number 9780521662918.
    10. Mr. Carlos A Leite & Jens Weidmann, 1999. "Does Mother Nature Corrupt? Natural Resources, Corruption, and Economic Growth," IMF Working Papers 1999/085, International Monetary Fund.
    11. Celentani, Marco & Ganuza, Juan-Jose, 2002. "Corruption and competition in procurement," European Economic Review, Elsevier, vol. 46(7), pages 1273-1303, July.
    12. Paolo Mauro, 2004. "The Persistence of Corruption and Slow Economic Growth," IMF Staff Papers, Palgrave Macmillan, vol. 51(1), pages 1-1.
    13. 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.
    14. Edgardo Campos, J. & Lien, Donald & Pradhan, Sanjay, 1999. "The Impact of Corruption on Investment: Predictability Matters," World Development, Elsevier, vol. 27(6), pages 1059-1067, June.
    15. Medio,Alfredo & Lines,Marji, 2001. "Nonlinear Dynamics," Cambridge Books, Cambridge University Press, number 9780521551861.
    16. 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 103-126, October.
    17. Shang-Jin Wei, 2000. "How Taxing is Corruption on International Investors?," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 1-11, February.
    18. Timothy Hawkins & Michael Gravier & Edward Powley, 2011. "Public Versus Private Sector Procurement Ethics and Strategy: What Each Sector can Learn from the Other," Journal of Business Ethics, Springer, vol. 103(4), pages 567-586, November.
    19. Rose-Ackerman, Susan, 1975. "The economics of corruption," Journal of Public Economics, Elsevier, vol. 4(2), pages 187-203, February.
    20. Roy Cerqueti & Raffaella Coppier & Gustavo Piga, 2009. "Corruption, growth and ethnolinguistic fractionalization: a theoretical model," Working Papers 57-2009, Macerata University, Department of Finance and Economic Sciences, revised Jan 2010.
    21. Ozge Mehtap & Ozgur Kokalan, 2013. "The relationship between corporate reputation and organizational citizenship behavior: a comparative study on TV companies and banks," Quality & Quantity: International Journal of Methodology, Springer, vol. 47(6), pages 3609-3619, October.
    22. King, Robert G. & Plosser, Charles I. & Rebelo, Sergio T., 1988. "Production, growth and business cycles : I. The basic neoclassical model," Journal of Monetary Economics, Elsevier, vol. 21(2-3), pages 195-232.
    23. Bose, Niloy & Capasso, Salvatore & Murshid, Antu Panini, 2008. "Threshold Effects of Corruption: Theory and Evidence," World Development, Elsevier, vol. 36(7), pages 1173-1191, July.
    24. Aymo Brunetti & Beatrice Weder, 1998. "Investment and institutional uncertainty: A comparative study of different uncertainty measures," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 134(3), pages 513-533, September.
    25. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(3), pages 681-712.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Irene Alfarone & Ugo Merlone, 2024. "Should I stay or should I go: A dynamical model of musicians’ agglomeration and migration," Quality & Quantity: International Journal of Methodology, Springer, vol. 58(1), pages 97-116, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Serena Brianzoni & Raffaella Coppier & Elisabetta Michetti, 2012. "A Growth Model with Corruption in Public Procurement: Equilibria and Policy Implications," Working Papers 68-2012, Macerata University, Department of Finance and Economic Sciences, revised Sep 2015.
    2. Eugen Dimant & Guglielmo Tosato, 2018. "Causes And Effects Of Corruption: What Has Past Decade'S Empirical Research Taught Us? A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 32(2), pages 335-356, April.
    3. Damir Piplica, 2011. "Corruption And Inflation In Transition Eu Member Countries," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 20(2), pages 469-506, december.
    4. Blackburn, Keith & Forgues-Puccio, Gonzalo F., 2009. "Why is corruption less harmful in some countries than in others?," Journal of Economic Behavior & Organization, Elsevier, vol. 72(3), pages 797-810, December.
    5. Jac C Heckelman & Benjamin Powell, 2010. "Corruption and the Institutional Environment for Growth," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 52(3), pages 351-378, September.
    6. Sefa Awaworyi Churchill & Mehmet Ugur & Siew Ling Yew, 2017. "Does Government Size Affect Per-Capita Income Growth? A Hierarchical Meta-Regression Analysis," The Economic Record, The Economic Society of Australia, vol. 93(300), pages 142-171, March.
    7. Bienvenido Ortega & Antonio Casquero & Jesús Sanjuán, 2016. "Corruption and Convergence in Human Development: Evidence from 69 Countries During 1990–2012," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 127(2), pages 691-719, June.
    8. M.Rosaria Alfano & A. Laura Baraldi, 2008. "The design of electoral rules and their impact on economic growth: the Italian case," Working Papers 3_2008, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
    9. Konstantinos Angelopoulos & George Economides, 2008. "Fiscal policy, rent seeking, and growth under electoral uncertainty: theory and evidence from the OECD," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 41(4), pages 1375-1405, November.
    10. Meixing Dai & Moïse Sidiropoulos & Eleftherios Spyromitros, 2015. "Fiscal Policy, Institutional Quality and Central Bank Transparency," Manchester School, University of Manchester, vol. 83(5), pages 523-545, September.
    11. M. Haque & Richard Kneller, 2009. "Corruption clubs: endogenous thresholds in corruption and development," Economics of Governance, Springer, vol. 10(4), pages 345-373, November.
    12. Zakharov, Nikita, 2019. "Does corruption hinder investment? Evidence from Russian regions," European Journal of Political Economy, Elsevier, vol. 56(C), pages 39-61.
    13. Ratbek Dzhumashev, 2014. "The Two-Way Relationship Between Government Spending And Corruption And Its Effects On Economic Growth," Contemporary Economic Policy, Western Economic Association International, vol. 32(2), pages 403-419, April.
    14. Dridi, Mohamed, 2013. "Corruption and Economic Growth: The Transmission Channels," MPRA Paper 47873, University Library of Munich, Germany.
    15. Adnan Haider & Musleh ud Din & Ejaz Ghani, 2011. "Consequences of Political Instability, Governance and Bureaucratic Corruption on Inflation and Growth: The Case of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 50(4), pages 773-807.
    16. Benjamin Powell & G.P. Manish & Malavika Nair, 2010. "Corruption, Crime and Economic Growth," Chapters, in: Bruce L. Benson & Paul R. Zimmerman (ed.), Handbook on the Economics of Crime, chapter 13, Edward Elgar Publishing.
    17. Keith Blackburn & Rashmi Sarmah, 2006. "Red Tape, Corruption and Finance," Economics Discussion Paper Series 0639, Economics, The University of Manchester.
    18. Pierre‐Guillaume Méon & Khalid Sekkat, 2004. "Does the Quality of Institutions Limit the MENA's Integration in the World Economy?," The World Economy, Wiley Blackwell, vol. 27(9), pages 1475-1498, September.

    More about this item

    Keywords

    Discrete dynamics; Multiple equilibria; Corruption ; Procurement; Growth; Stability; C61; C63; H57; O04; E27;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:qualqt:v:49:y:2015:i:6:p:2387-2410. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.