Abstract

This paper presents an analysis of bureaucratic corruption, income
inequality and economic development. The analysis is based on a dynamic
general equilibrium model in which bureaucrats are appointed
by the government to implement a redistributive programme of taxes
and subsidies designed to benefit the poor. Corruption is reflected
in bribery and tax evasion as bureaucrats conspire with the rich in
providing false information to the government. In accordance with
empirical evidence, the model predicts a positive relationship between
corruption and inequality and a negative relationship between corruption
and development.

Distribution and Development
in a Model of Misgovernance

Keith Blackburn and Gonzalo F. Forgues-Puccio
Centre for Growth and Business Cycle Research
School of Economic Studies, University of Manchester