AbstractWhen estimating the determinants of perceived corruption, economists assumed that there is full independence across countries. In the presence of peer-group or learning effects through cross-border economic activity (such as trade or labor migration), this assumption might be violated. We provide evidence that this is the case. Using a cross-section of 123 economies for the year 2000, we illustrate that corruption in one country spills over to adjacent economies. This finding implies that institutional changes reducing corruption in one country lead to smaller but qualitatively similar effects in neighboring countries.
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Bibliographic InfoPaper provided by University of Stirling, Division of Economics in its series Stirling Economics Discussion Papers with number 2008-09.
Date of creation: Jun 2008
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Perceived corruption; Institutions; Spatial econometrics;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-11-04 (All new papers)
- NEP-DEV-2008-11-04 (Development)
- NEP-MIG-2008-11-04 (Economics of Human Migration)
- NEP-POL-2008-11-04 (Positive Political Economics)
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