Country output and financial black holes
Public–private partnerships and the Laffer curve, fiscal corruption risk, and bailout rate of non-performing loans
Bibliographic Data
| ID | 15067947 |
|---|---|
| Authors | Saisomphorn Larhsoukanh (0000-0003-3521-9187, Southwest Jiaotong University, corresponding author), Chengzhang Wang (0000-0002-2967-5066, Southwest Jiaotong University) |
| Year | 2020 |
| Volume | 33 |
| Issue | 1 |
| Pages | 540-554 |
| Publication date | 2020-01-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Economic Research-Ekonomska Istraživanja (JOURNAL) |
| Journal identifiers | ISSN: 1331-677X • E-ISSN: 1848-9664 |
| Publisher | Informa UK Limited (PUBLISHER • GB) |
| DOI | 10.1080/1331677x.2020.1718523 |
| OpenAlex | W3009658177 |
| Language | EN |
| References cited | 17 |
This study develops the link between output and fiscal corruption risk in public–private partnership (PPP) schemes and the government bailout rate of non-performing loans (NPLs). The model assumes that corruption is widespread in such public investment programs. The objective functions of the government and PPP firms include fiscal corruption risk, given that the PPP firm and tax inspector can ‘effectively’ negotiate bribes. The model solves for the optimal country output (i.e., aggregate productivity) according to the Lagrange method. Long-term prospects are introduced to solve the problem with commercial banks, as most PPPs borrow from commercial banks. The results reaffirm that tax policy can exacerbate the country’s output loss. Although the equilibria between aggregate productivity and the Laffer curve lack a direct link to fiscal corruption risk, their magnitude does and depends on the number of PPPs. The PPP transfer from the government in period 2 and the number of PPPs rather than government expenditure in period 1 and the Laffer curve (tax revenues) mainly determines the bailout rate of PPPs’ NPLs. The article concludes with suggestions to prevent tax evasion and fiscal corruption risk in PPP schemes by using a cluster of cooperation, and recommends further research into cultural aspects
Bailout · Crowding out · Economics · Financial crisis · Laffer curve · Language change · Macroeconomics · Monetary economics · Productivity · Public economics · Tax rate · Tax reform · Tax revenue · Corporate Taxation and Avoidance · Fiscal Policy and Economic Growth · Local Government Finance and Decentralization · Finance
| Highly cited | No |
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