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How Does Corruption Affect Public Debt? An Empirical Analysis

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Author Info

  • Arusha Cooray
  • Friedrich Schneider

Abstract

This paper examines the relationship between corruption and public debt in 106 countries. Results suggest that corruption leads to an increase in public debt. We also investigate if the effect of corruption on pblic debt is increased by government expenditure, the shadow economy and military expenditure. We find that the effect of corruption on public debt is compounded by increased government expenditure and increased size of the shadow economy.

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File URL: http://www.econ.jku.at/papers/2013/wp1322.pdf
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Bibliographic Info

Paper provided by Department of Economics, Johannes Kepler University Linz, Austria in its series Economics working papers with number 2013-22.

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Length: 30 pages
Date of creation: Dec 2013
Date of revision:
Handle: RePEc:jku:econwp:2013_22

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Related research

Keywords: corruption; public debt; government expenditure; shadow economy; military expenditure;

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References

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  1. Eugen Dimant & Tim Krieger & Daniel Meierrieks, 2013. "The effect of corruption on migration,1985--2000," Applied Economics Letters, Taylor & Francis Journals, vol. 20(13), pages 1270-1274, September.
  2. Axel Dreher & Friedrich Schneider, 2006. "Corruption and the Shadow Economy: An Empirical Analysis," CESifo Working Paper Series 1653, CESifo Group Munich.
  3. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," Journal of Law, Economics and Organization, Oxford University Press, vol. 15(1), pages 222-79, April.
  4. Al-Marhubi, Fahim A., 2000. "Corruption and inflation," Economics Letters, Elsevier, vol. 66(2), pages 199-202, February.
  5. Jay Pil Choi & Marcel Thum, 2002. "Corruption and the Shadow Economy," CESifo Working Paper Series 633, CESifo Group Munich.
  6. Mendez, Fabio & Sepulveda, Facundo, 2006. "Corruption, growth and political regimes: Cross country evidence," European Journal of Political Economy, Elsevier, vol. 22(1), pages 82-98, March.
  7. Vito Tanzi, 1998. "Corruption Around the World," IMF Working Papers 98/63, International Monetary Fund.
  8. Johnson, Simon & Kaufmann, Daniel & Zoido-Lobaton, Pablo, 1998. "Regulatory Discretion and the Unofficial Economy," American Economic Review, American Economic Association, vol. 88(2), pages 387-92, May.
  9. Craig Depken & Courtney Lafountain, 2006. "Fiscal consequences of public corruption: Empirical evidence from state bond ratings," Public Choice, Springer, vol. 126(1), pages 75-85, January.
  10. Eugen Dimant & Tim Krieger & Margarete Redlin, 2013. "A Crook is a Crook … But is He Still a Crook Abroad? - On the Effect of Immigration on Destination-Country Corruption," Working Papers CIE 71, University of Paderborn, CIE Center for International Economics.
  11. Gupta, Sanjeev & de Mello, Luiz & Sharan, Raju, 2001. "Corruption and military spending," European Journal of Political Economy, Elsevier, vol. 17(4), pages 749-777, November.
  12. Clara Delavallade, 2006. "Corruption and distribution of public spending in developing countries," Journal of Economics and Finance, Springer, vol. 30(2), pages 222-239, June.
  13. Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
  14. Friedman, Eric & Johnson, Simon & Kaufmann, Daniel & Zoido-Lobaton, Pablo, 2000. "Dodging the grabbing hand: the determinants of unofficial activity in 69 countries," Journal of Public Economics, Elsevier, vol. 76(3), pages 459-493, June.
  15. Mo, Pak Hung, 2001. "Corruption and Economic Growth," Journal of Comparative Economics, Elsevier, vol. 29(1), pages 66-79, March.
  16. Vito Tanzi, 1998. "Corruption Around the World: Causes, Consequences, Scope, and Cures," IMF Staff Papers, Palgrave Macmillan, vol. 45(4), pages 559-594, December.
  17. Toke S. Aidt, 2003. "Economic analysis of corruption: a survey," Economic Journal, Royal Economic Society, vol. 113(491), pages F632-F652, November.
  18. Johann Graf Lambsdorff, 2003. "How Corruption Affects Productivity," Kyklos, Wiley Blackwell, vol. 56(4), pages 457-474, November.
  19. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Crisi e corruzione in Italia
    by Alberto Bagnai in Goofynomics on 2014-06-17 16:57:00

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