The Impact of Corruption on the Black Market Premium
AbstractRecently the impact of institutional factors on macro variables has been gaining momentum. Researchers have investigated the impact of corruption, law and order, and bureaucracy on economic growth, inflation, investment, productivity, and the real exchange rate. In this article, we investigate empirically the impact of institutional factors on the black market premium. In many developing nations, because of government restrictions on capital and trade flows, there exists a black market for foreign exchange. By using data from 60 developing countries over the 1982–1995 period, we show that the black market premium is higher in countries that are plagued by more corruption. This finding seems to be insensitive to five different measures of corruption as well as whether cross-section or panel data are used.
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Bibliographic InfoArticle provided by Southern Economic Association in its journal Southern Economic Journal.
Volume (Year): 71 (2005)
Issue (Month): 3 (January)
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- F31 - International Economics - - International Finance - - - Foreign Exchange
- Z10 - Other Special Topics - - Cultural Economics - - - General
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- Muhammad, Shahbaz & Qazi, Muhammad Adnan Hye & Muhammad, Shahbaz Shabbir, 2011. "Does Corruption Increase Financial Development? A Time Series Analysis in Pakistan," MPRA Paper 29640, University Library of Munich, Germany, revised 10 Mar 2011.
- John Dawson & Steven Millsaps & Mark Strazicich, 2004. "Trend Breaks and Seasonality in the Yugoslav Black Market for Dollars, 1974-1987," Working Papers 04-04, Department of Economics, Appalachian State University, revised 2005.
- SULIMAN, Osman, 2013. "Do Capital Inflows Cause Currency Black Markets In Mena Countries? Causality Tests For Heterogeneous Panels," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 13(1), pages 187-202.
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