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

22 Pages Posted: 13 Feb 2006

See all articles by Daniel Kaufmann

Daniel Kaufmann

Natural Resource Governance Institute (NRGI); The Brookings Institution

Shang-Jin Wei

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

Multiple version iconThere are 2 versions of this paper

Date Written: March 2000

Abstract

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.

Keywords: Bribery, corruption, red tape, speed money, grease payment

JEL Classification: 012

Suggested Citation

Kaufmann, Daniel and Wei, Shang-Jin, Does 'Grease Money' Speed Up the Wheels of Commerce? (March 2000). IMF Working Paper, Vol. , pp. 1-22, 2000. Available at SSRN: https://ssrn.com/abstract=879552

Daniel Kaufmann (Contact Author)

Natural Resource Governance Institute (NRGI) ( email )

80 Broad Street
New York, NY 10004
United States

HOME PAGE: http://www.resourcegovernance.org

The Brookings Institution ( email )

1775 Massachusetts Avenue, NW
Washington, DC 20036
United States

HOME PAGE: http://www.brookings.edu/experts/kaufmannd

Shang-Jin Wei

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

International Monetary Fund (IMF)

700 19th Street, N.W.
Washington, DC 20431
United States

Tsinghua University - School of Economics & Management

Beijing, 100084
China

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
247
Abstract Views
2,137
rank
87,744
PlumX Metrics