Does 'Grease Money' Speed Up the Wheels of Commerce?

Author/Editor:

Daniel Kaufmann ; Shang-Jin Wei

Publication Date:

March 1, 2000

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

In a general equilibrium in which bribe-extracting bureaucrats can endogenously choose regulatory burden and delay, the effective (not just nominal) red tape and bribery can be positively correlated across firms. Using data from three worldwide firm surveys, this paper finds evidence consistent with this hypothesis. Firms that pay more in bribes are also likely to spend more, not less, management time with bureaucrats in negotiating regulations. They also face a higher, not lower, cost of capital.

Series:

Working Paper No. 00/64

Subject:

English

Publication Date:

March 1, 2000

ISBN/ISSN:

9781451848557/1018-5941

Stock No:

WPIEA0642000

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

21

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