Political Corruption and Legislative Complexity: A Macroeconomic Analysis

Abstract

In this paper we use a dynamic model to investigate the macroeconomic impact of legislative complexity on growth and welfare, in comparison with political corruption. After a careful review of the economic literature on corruption and legislative complexity, we set up the model. The main theoretical findings of the analysis are that legislative complexity, like corruption, constitutes a constraint to growth and determines a redistribution of income in favor of politicians. To check if the previsions of the model are verified we introduce a simple indicator of legislative complexity, built in a way that makes it internationally comparable, and consider the data for sixty-seven countries; using OLS and 2SLS econometric models we estimate the effects of legislative complexity and corruption on the growth rate of per capita income. The results of the econometric analysis support the hypothesis that legislative complexity is a constraint to growth, and that in countries with a long history of liberal democracy, legislative complexity determines a redistribution to the detriment of the more poor social classes.