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Corruption and Stock Market Prices: A General-Equilibrium Approach

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  • Vasilev, Aleksandar

Abstract

This paper utilizes an otherwise standard micro-founded general-equilibrium setup, which is augmented with an output-evasion mechanism to assess the magnitude of corruption, and the effect of corruption on stock prices. The model is calibrated to Bulgaria after the introduction of the currency board (1999-2019), as one of the poorest EU states. A computational experiment performed within this setup predicts that corruption has a negative effect on stock prices. Spending on law and order, and better bureaucratic quality lower corruption, and increase stock prices.

Suggested Citation

  • Vasilev, Aleksandar, 2025. "Corruption and Stock Market Prices: A General-Equilibrium Approach," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 0(2), pages 7-18.
    • Handle: RePEc:zbw:espost:341031
    DOI: 10.14505/jmef.v11.2(21).01
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    References listed on IDEAS

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    1. Angelopoulos, Konstantinos & Philippopoulos, Apostolis & Vassilatos, Vanghelis, 2009. "The social cost of rent seeking in Europe," European Journal of Political Economy, Elsevier, vol. 25(3), pages 280-299, September.
    2. Vasilev, Aleksandar, 2017. "VAT Evasion in Bulgaria: A General-Equilibrium Approach," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 8(2), pages 1-17.
    3. Vasilev, Aleksandar, 2020. "Search and matching frictions and business cycle fluctuations in Bulgaria," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 19(3), pages 319-340.
    4. Konstantinos Angelopoulos & George Economides & Vanghelis Vassilatos, 2011. "Do institutions matter for economic fluctuations? Weak property rights in a business cycle model for Mexico," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(3), pages 511-531, July.
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    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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