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Old and new factors affecting corruption in Europe: Evidence from panel data

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  • Bosco, Bruno

Abstract

Assuming cross-sectional dependence across data, this study employs a version of Pesaran’s Common Correlated Effects (CCE) model to explore old and new hypotheses on the determinants of perceived corruption in the public and political sectors in 31 European countries. In particular, this study analyzes the relationship between risk of poverty and corruption and shows that social distress increases corruption at any level of per capita income and significantly interacts with economic, political, and cultural variables. Public expenditure has an adverse effect on corruption but the perception of a high level of effectiveness and efficiency of public policy counterbalances the negative volume effect of public expenditure and reduces the undesirable influence of poverty on corruption. The strength of cross-sectional dependence across countries that emerged from CCE estimates is interpreted as an effect (inter alia) of the uneven adoption and implementation by European countries of EU anticorruption measures. Policy implications of the results are also discussed.

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  • Bosco, Bruno, 2016. "Old and new factors affecting corruption in Europe: Evidence from panel data," Economic Analysis and Policy, Elsevier, vol. 51(C), pages 66-85.
    • Handle: RePEc:eee:ecanpo:v:51:y:2016:i:c:p:66-85
    DOI: 10.1016/j.eap.2016.06.002
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    6. Sulemana, Iddisah & Kpienbaareh, Daniel, 2018. "An empirical examination of the relationship between income inequality and corruption in Africa," Economic Analysis and Policy, Elsevier, vol. 60(C), pages 27-42.
    7. Fakir, Adnan M.S. & Ahmad, Azraf Uddin & Hosain, K.M. Masnun & Hossain, Mostafa Rafid & Gani, Ridhim Sadman, 2017. "The comparative effect of corruption and Piketty’s second fundamental law of capitalism on inequality," Economic Analysis and Policy, Elsevier, vol. 55(C), pages 90-105.
    8. Qamar Abbas & Li Junqing & Muhammad Ramzan & Sumbal Fatima, 2021. "Role of Governance in Debt-Growth Relationship: Evidence from Panel Data Estimations," Sustainability, MDPI, vol. 13(11), pages 1-19, May.
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    More about this item

    Keywords

    Poverty risk; Corruption in Europe; Public sector size; European anti-corruption regulation; Cross-sectional dependence;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C29 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Other
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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