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Taxation, Corruption and the Exchange Rate Regime

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  • Carsten Hefeker

    ()
    (University of Siegen)

Abstract

The paper analyzes the relation between institutional quality, such as corruption, in a country and its monetary regime. It is shown that a credibly fixed exchange rate to a low inflation country, like a currency board, can reduce corruption and improve the fiscal system. A monetary union, however, has ambiguous effects. I find that that there is convergence between countries with regard to the level of corruption.

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File URL: http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/11-2009_hefeker.pdf
File Function: First version, 2009
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Bibliographic Info

Paper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 200911.

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Length: 24 pages
Date of creation: 2009
Date of revision:
Publication status: Forthcoming in
Handle: RePEc:mar:magkse:200911

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Keywords: Exchange Rate Regime; Monetary Policy; Fiscal Policy; Seigniorage; Corruption; Developing and Transition Countries.;

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Citations

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Cited by:
  1. Dimakou, Ourania, 2013. "Monetary and fiscal institutional designs," Journal of Comparative Economics, Elsevier, vol. 41(4), pages 1141-1166.
  2. Pierre Faure, 2011. "A note on poor-institution traps in international fiscal policy games," Economics Bulletin, AccessEcon, vol. 31(1), pages 375-387.
  3. Ferré Carracedo, Montserrat & García Fortuny, Judit & Manzano, Carolina, 2013. "The Conservativeness of the Central Bank when Institutional Quality is Poor," Working Papers 2072/222198, Universitat Rovira i Virgili, Department of Economics.
  4. Katherina Popkova, 2011. "Can the exchange rate regime influence corruption?," Volkswirtschaftliche Diskussionsbeiträge 148-11, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
  5. Dai, Meixing & Sidiropoulos, Moïse & Spyromitros, Eleftherios, 2010. "Fiscal policy, institutional quality and central bank transparency," MPRA Paper 23766, University Library of Munich, Germany.
  6. Frank Bohn, 2013. "The Politics of Surprise Devaluations: Modelling Motives for Giving Up a Peg," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 233(5-6), pages 562-574, October.
  7. Pierre-Henri Faure, 2011. "Does the fight against corruption require international cooperation?," Working Papers hal-00610523, HAL.

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