Does 'Grease Money' Speed Up the Wheels of Commerce?
The Brookings Institution
Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); International Monetary Fund (IMF); Tsinghua University - School of Economics & Management
IMF Working Paper No. 00/64
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.
Number of Pages in PDF File: 22
Keywords: Bribery, corruption, red tape, speed money, grease payment
JEL Classification: 012working papers series
Date posted: February 13, 2006
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