|
Archive@NYU >
Stern School of Business >
Economics Working Papers >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/26148
|
| Title: | Moving Toward the Rule of Law in the Face of Corruption: Re-examining
the Big-Bang |
| Authors: | Katz, Barbara G.
Owen, Joel |
| Keywords: | Rule of law
Rule of law
big-bang
shock therapy
gradualism
transition |
| Issue Date: | Nov-2004 |
| Series/Report no.: | EC-04-34 |
| Abstract: | We investigate the claim that the establishment of property rights in an
economy in transition would create its own demand for the enforcement of
laws to protect those rights. Our model contains a government seeking
activities to accomplish certain objectives that depend on public
support for the enforcement of the rule of law. It also contains agents
who interpret the activities of the government as signals as to the
intent of the government to enforce the rule of law. The agents use the
signals in their choice of whether to support the objectives of the
government. With both the government and the agents playing an active
role, we establish conditions under which the activities chosen by the
government will maximize its benefits and, at the same time, maximize
the constituency in support of enforcement. These conditions provide a
basis for the argument for the implementation of the big-bang policy in
economies in transition. However, when these conditions do not hold, we
show that in pursuing its own goals, the government reduces support for
the enforcement of the rule of law, which, in our model, leads to an
increase in corruption. Two characteristics play an important role in
these conditions: the initial level of corruption in the economy and the
types of activities the government chooses to undertake. We present four
examples to determine the relative importance to our conclusions of each
of these characteristics. |
| URI: | http://hdl.handle.net/2451/26148 |
| Appears in Collections: | Economics Working Papers
|
All items in Faculty Digital Archive are protected by copyright, with all rights reserved.
|
