Association for Public Policy Analysis & Management

Corruption is a pervasive problem with impacts in different areas. Most of the times it represents a burden to the economic system. It misallocates productive capital having repercussions on the optimal path of economic growth of the economy. In this paper I evaluate the repercussions of corruption in the mitigation policies because of the shock in the economic system. To assess the impact of corruption in the climatic and economic system I use the RICE model. The RICE model accounts for the economic impacts of climate change at a global level and projects economic and climatic trajectories under different policy scenarios. The control variable modified by corruption is the saving rate. I evaluate this shock by comparing the optimal scenarios in the original RICE projections and the outcomes of the modified RICE. The impacts of corruption result in a negative impact in the economic output and as a result in a reduction of CO₂ emissions. The overall impact of corruption is a reduction of total global welfare and an increase in the social cost of carbon.