Corruption is known to reduce the ratio of investment to GDP. This study breaks down investment into domestic savings and net capital inflows. A significant impact of corruption exists only for the latter variable because the first variable is distorted by general equilibrium repercussions. An...

This chapter argues that reciprocity provides a key to understanding corrupt behavior and its limitations. It allows for an understanding why agents not only are guided by explicit incentives but also serve those to whom they owe gratitude. It allows to observe how citizens disregard their...