On the stability and potential cyclicity of corruption in governments subject to popularity constraints

This paper considers the widespread phenomenon of political corruption and analyzes some of its political, economic and dynamic properties. We assume an individually rational politician (homo oeconomicus) who derives benefits from popularity and from corruption (directly or indirectly). Of course, popularity will suffer as the evidence of corruption piles up. Given these dynamic reactions, the politician has to trade off between popularity and corruption within an intertemporal framework. This may lead to complex, in particular to cyclical and even unstable, patterns. However, these complexities are restricted to those cases where popularity is less important ('dictatorship'), while the necessity of high public approval rates ('democracy') is sufficient for stable regimes