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Public services and goods can provide relevant inputs to private productive activities. Modern States organize the production of these inputs on the basis of taxes collected from the community. When this process is affected by bureaucrats' corruption the efficiency of public expenditure decreases. In this paper we deal with the long-run consequences of this form of corruption. A model of economic growth with public inputs to private production is put forward. The production of public goods needs inputs from the private sector that bureaucrats buy with some degree of discretion. The aim of an illegal agreement between the exchanging parties is to profit from the lack of information. Governments fight corruption through costly public purchases monitoring. The extent of corruption is a decision variable in the maximization of expected revenue. This model finds support in the econometric analysis of the Italian case. A dynamic panel data approach to economic growth based on data of 20 regions allows us to estimate the effect of corruption on the productivity of expenditure on public investment. This effect is significant and distinct from a direct negative one of corruption on the growth rate.(JEL O10, H50; key words: government efficiency, dynamic panel data, Italian economy)

According to several indexes of corruption, the Italian society is strongly affected by this negative phenomenon. This paper investigates the determinants of corruption in

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractWe study the consequences of broader access to credit and to capital markets on household's decisions over the number of children. In a life-cycle model of choice with forward and backward caring between parents and children, we analyze the effects of relaxing adults' borrowing constrains and broadening the opportunities for financial investment, and show how the sign of these effects depends on the role of children as a normal or inferior good in parents' preferences. We estimate the quantitative implications of our theoretical model on data from 145 countries over the period 1980-2006. Empirical results indicate that improved access to credit reduces fertility in poor countries and increases fertility in high-income countries. The effect of the development of capital markets on the number of children is negative in low-income countries and positive in the rich. When the analysis includes public pensions the main results remain the same. We also estimate the effect of the real interest rate, which proves significant and negative. JEL Codes: D1, J13, G1.