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Corruption and Income Inequality in Asian Countries: Bootstrap Panel Granger Causality Test

  • Chiung-Ju Huang


    (Department of Public Finance, Feng Chia University, Taiwan)

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    The purpose of this study is to investigate the causal relationship between corruption and income inequality experienced in ten Asian economies over the period 1995 to 2010. This study utilizes the bootstrap panel Granger causality approach, which allows both cross-sectional dependence and heterogeneity across countries, and is based on seemingly unrelated regressions (SUR) systems and Wald tests with country-specific bootstrap critical values. The empirical results show that there is a unidirectional causality from corruption to income inequality in China and the Philippines. Meanwhile, a one-way causal relationship running from income inequality to corruption exists in Indonesia, Japan, Korea, and Thailand.

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    Article provided by Institute for Economic Forecasting in its journal Romanian Journal for Economic Forecasting.

    Volume (Year): (2013)
    Issue (Month): 4 (December)
    Pages: 161-170

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    Handle: RePEc:rjr:romjef:v::y:2013:i:4:p:161-170
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    7. Breusch, T S & Pagan, A R, 1980. "The Lagrange Multiplier Test and Its Applications to Model Specification in Econometrics," Review of Economic Studies, Wiley Blackwell, vol. 47(1), pages 239-53, January.
    8. Enrico Colombatto, 2003. "Why is Corruption Tolerated?," The Review of Austrian Economics, Springer, vol. 16(4), pages 363-379, December.
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    10. M. Hashem Pesaran, 2004. "General Diagnostic Tests for Cross Section Dependence in Panels," CESifo Working Paper Series 1229, CESifo Group Munich.
    11. Oguzhan C. Dincer & Burak Gunalp, 2012. "Corruption And Income Inequality In The United States," Contemporary Economic Policy, Western Economic Association International, vol. 30(2), pages 283-292, 04.
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