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Taxation, Corruption and the Exchange Rate Regime

  • Carsten Hefeker

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 there is convergence between countries with regard to the level of corruption.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2009/wp-cesifo-2009-02/cesifo1_wp2561.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2561.

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Date of creation: 2009
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Handle: RePEc:ces:ceswps:_2561
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