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The interaction effect of economic freedom and democracy on corruption: A panel cross-country analysis

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  • Saha, Shrabani
  • Gounder, Rukmani
  • Su, Jen-Je
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    Abstract

    This paper examines the effects of economic freedom, democracy and its interaction term on controlling corruption. Interactive results indicate that economic freedom and democracy significantly combat corruption. Economic freedom reduces corruption in any political environment. Democracy increases corruption when economic liberalization is low.

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    File URL: http://www.sciencedirect.com/science/article/B6V84-4WW2SF2-2/2/5e88a673c3aad1ef608018dfc550bdf5
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    Bibliographic Info

    Article provided by Elsevier in its journal Economics Letters.

    Volume (Year): 105 (2009)
    Issue (Month): 2 (November)
    Pages: 173-176

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    Handle: RePEc:eee:ecolet:v:105:y:2009:i:2:p:173-176

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    Web page: http://www.elsevier.com/locate/ecolet

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    Keywords: Democracy Economic freedom Corruption Panel data;

    References

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    1. Emerson, Patrick M., 2006. "Corruption, competition and democracy," Journal of Development Economics, Elsevier, vol. 81(1), pages 193-212, October.
    2. Thierry Verdier & Daron Acemoglu, 2000. "The Choice between Market Failures and Corruption," American Economic Review, American Economic Association, vol. 90(1), pages 194-211, March.
    3. Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, vol. 76(3), pages 399-457, June.
    4. Robert J. Barro, 1999. "Determinants of Democracy," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages S158-S183, December.
    5. Fisman, Raymond & Gatti, Roberta, 2002. "Decentralization and corruption: evidence across countries," Journal of Public Economics, Elsevier, vol. 83(3), pages 325-345, March.
    6. Rajeev K. Goel & Michael A. Nelson, 2005. "Economic Freedom Versus Political Freedom: Cross-Country Influences On Corruption ," Australian Economic Papers, Wiley Blackwell, vol. 44(2), pages 121-133, 06.
    7. Chowdhury, Shyamal K., 2004. "The effect of democracy and press freedom on corruption: an empirical test," Economics Letters, Elsevier, vol. 85(1), pages 93-101, October.
    8. Tavares, Jose & Wacziarg, Romain, 2001. "How democracy affects growth," European Economic Review, Elsevier, vol. 45(8), pages 1341-1378, August.
    9. Rafael Di Tella & Alberto Ades, 1999. "Rents, Competition, and Corruption," American Economic Review, American Economic Association, vol. 89(4), pages 982-993, September.
    10. Felipe Larraín & José Tavares, 2004. "Does Foreign Direct Investment Decrease Corruption?," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 41(123), pages 217-230.
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    Citations

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    Cited by:
    1. Kar, Saibal & Saha, Shrabani, 2012. "Corruption, Shadow Economy and Income Inequality: Evidence from Asia," IZA Discussion Papers 7106, Institute for the Study of Labor (IZA).
    2. Kotera, Go & Okada, Keisuke & Samreth, Sovannroeun, 2010. "A study on the relationship between corruption and government size: the role of democracy," MPRA Paper 25015, University Library of Munich, Germany.
    3. Kalenborn, Christine & Lessmann, Christian, 2013. "The impact of democracy and press freedom on corruption: Conditionality matters," Journal of Policy Modeling, Elsevier, vol. 35(6), pages 857-886.
    4. Kotera, Go & Okada, Keisuke & Samreth, Sovannroeun, 2012. "Government size, democracy, and corruption: An empirical investigation," Economic Modelling, Elsevier, vol. 29(6), pages 2340-2348.
    5. Asongu Simplice, 2013. "Fighting African corruption when existing corruption-control levels matter in a dynamic cultural setting," Working Papers 13/028, African Governance and Development Institute..
    6. Shrabani Saha & Jen-Je Su, 2012. "Investigating the Interaction Effect of Democracy and Economic Freedom on Corruption: A Cross-Country Quantile Regression Analysis," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 42(3), pages 389-396, December.
    7. Go, Kotera & Okada, Keisuke & Samreth, Sovannroeun, 2010. "A panel study on the relationship between corruption and government size," MPRA Paper 21519, University Library of Munich, Germany.
    8. Saha, Shrabani & Gounder, Rukmani, 2013. "Corruption and economic development nexus: Variations across income levels in a non-linear framework," Economic Modelling, Elsevier, vol. 31(C), pages 70-79.

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