IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Corruption in Turbulent Times: a Response to Shocks?




Economic instability may trigger ex ante and ex post corruption strategies, respectively resulting from the perception and experience of economic fluctuations. Using measures of export instability reflecting its ex ante and ex post effects, dynamic panel estimations are conducted with corruption perception data covering 62 developed and developing countries over 1985-2005; and cross-section estimations with aggregated data on 22,062 firms' bribe reports in 38 developing countries. Estimations support a positive ex post effect of both positive and adverse sharp export fluctuations on corruption, channeled by restricted credit access and weak democratic institutions. By contrast, a deterrent ex post effect of both positive and negative normal export fluctuations is found, channeled by facilitated credit access and effective democratic institutions. Estimations also support a positive ex ante effect of instability on corruption, especially when access to financial markets is restricted. Therefore, when institutions are dysfunctional, both favorable and adverse shocks may increase corruption prevalence.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by FERDI in its series Working Papers with number P106.

in new window

Date of creation: Jun 2014
Date of revision:
Handle: RePEc:fdi:wpaper:1631
Contact details of provider: Phone: +33473177542
Web page:

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Patrick GUILLAUMONT & Lisa CHAUVET, 1999. "Aid and Performance: A Reassessment," Working Papers 199910, CERDI.
  2. Christian EBEKE & Jean-Louis COMBES, 2010. "Remittances and Household Consumption Instability in Developing Countries," Working Papers 201015, CERDI.
  3. Søreide, Tina, 2009. "Too risk averse to stay honest?: Business corruption, uncertainty and attitudes toward risk," International Review of Law and Economics, Elsevier, vol. 29(4), pages 388-395, December.
  4. Markus Brückner, 2010. "Rain and the Democratic Window of Opportunity," 2010 Meeting Papers 224, Society for Economic Dynamics.
  5. Boubakri, Narjess & Guedhami, Omrane & Mishra, Dev & Saffar, Walid, 2012. "Political connections and the cost of equity capital," Journal of Corporate Finance, Elsevier, vol. 18(3), pages 541-559.
  6. Rabah Arezki & Markus Bruckner, 2011. "Resource Windfalls and Emerging Market Sovereign Bond Spreads: The Role of Political Institutions," School of Economics Working Papers 2011-08, University of Adelaide, School of Economics.
  7. Stefan Dercon, 2000. "Income risk, coping strategies and safety nets," Economics Series Working Papers WPS/2000-26, University of Oxford, Department of Economics.
  8. Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, vol. 76(3), pages 399-457, June.
  9. John Thornton, 2009. "Does Financial Development Reduce Corruption?," Working Papers 09003, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).
  10. Romain Ranciere & Aaron Tornell & Frank Westermann, 2005. "Systemic Crises and Growth," CESifo Working Paper Series 1451, CESifo Group Munich.
  11. Benjamin F. Jones & Benjamin A. Olken, 2010. "Climate Shocks and Exports," American Economic Review, American Economic Association, vol. 100(2), pages 454-59, May.
  12. Grossman, Gene & Helpman, Elhanan, 1993. "Protection for Sale," CEPR Discussion Papers 827, C.E.P.R. Discussion Papers.
  13. Claudia Williamson, 2009. "Informal institutions rule: institutional arrangements and economic performance," Public Choice, Springer, vol. 139(3), pages 371-387, June.
  14. Bryan W Husted, 1999. "Wealth, Culture, and Corruption," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 30(2), pages 339-359, June.
  15. Amore, Mario Daniele & Bennedsen, Morten, 2013. "The value of local political connections in a low-corruption environment," Journal of Financial Economics, Elsevier, vol. 110(2), pages 387-402.
  16. Betsey Stevenson & Justin Wolfers, 2011. "Trust in Public Institutions over the Business Cycle," American Economic Review, American Economic Association, vol. 101(3), pages 281-87, May.
  17. Bevan, David & Collier, Paul & Gunning, Jan Willem, 1993. "Trade shocks in developing countries: Consequences and policy responses," European Economic Review, Elsevier, vol. 37(2-3), pages 557-565, April.
  18. Patrick Guillaumont & Frédéric Puech, 2011. "Macro-Economic Instability and Crime," Working Papers halshs-00564579, HAL.
  19. Ehrlich, Isaac & Becker, Gary S, 1972. "Market Insurance, Self-Insurance, and Self-Protection," Journal of Political Economy, University of Chicago Press, vol. 80(4), pages 623-48, July-Aug..
  20. Jonathan Isham & Michael Woolcock & Lant Pritchett & Gwen Busby, 2005. "The Varieties of Resource Experience: Natural Resource Export Structures and the Political Economy of Economic Growth," World Bank Economic Review, World Bank Group, vol. 19(2), pages 141-174.
  21. Fisman, Raymond & Svensson, Jakob, 2007. "Are corruption and taxation really harmful to growth? Firm level evidence," Journal of Development Economics, Elsevier, vol. 83(1), pages 63-75, May.
  22. Gokcekus, Omer & Suzuki, Yui, 2011. "Business cycle and corruption," Economics Letters, Elsevier, vol. 111(2), pages 138-140, May.
  23. Patrick Guillaumont, 2010. "Assessing the Economic Vulnerability of Small Island Developing States and the Least Developed Countries," Working Papers id:2625, eSocialSciences.
  24. Ahlin, Christian & Pang, Jiaren, 2008. "Are financial development and corruption control substitutes in promoting growth?," Journal of Development Economics, Elsevier, vol. 86(2), pages 414-433, June.
  25. Lederman, Daniel & Loayza, Norman & Reis Soares, Rodrigo, 2001. "Accountability and corruption : political institutions matter," Policy Research Working Paper Series 2708, The World Bank.
  26. van der Ploeg, Frederick, 2010. "Aggressive oil extraction and precautionary saving: Coping with volatility," Journal of Public Economics, Elsevier, vol. 94(5-6), pages 421-433, June.
  27. Acemoglu, Daron & Johnson, Simon & Robinson, James A & Thaicharoen, Yunyong, 2002. "Institutional Causes, Macroeconomic Symptoms: Volatility, Crises and Growth," CEPR Discussion Papers 3575, C.E.P.R. Discussion Papers.
  28. Jakob Svensson, 2003. "Who Must Pay Bribes and How Much? Evidence from a Cross Section of Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 207-230.
  29. Arin, K. Peren & Chmelarova, Viera & Feess, Eberhard & Wohlschlegel, Ansgar, 2011. "Why are corrupt countries less successful in consolidating their budgets?," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 521-530, August.
  30. Robinson, Jonathan & Yeh, Ethan, 2008. "Transactional Sex as a Response to Risk in Western Keny," MPRA Paper 7350, University Library of Munich, Germany.
  31. Norman V. Loayza & Romain Rancière & Luis Servén & Jaume Ventura, 2007. "Macroeconomic Volatility and Welfare in Developing Countries: an Introduction," Post-Print halshs-00754201, HAL.
  32. Guriev, Sergei, 2003. "Red Tape and Corruption," CEPR Discussion Papers 3972, C.E.P.R. Discussion Papers.
  33. Paolo Mauro, 2002. "The Persistence of Corruption and Slow Economic Growth," IMF Working Papers 02/213, International Monetary Fund.
  34. Maarten J. Voors & Èrwin H. Bulte & Richard Damania, 2011. "Income Shocks and Corruption in Africa: Does a Virtuous Cycle Exist?," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 20(3), pages 395-418, June.
  35. Joël Cariolle & Michaël Goujon, 2015. "Measuring Macroeconomic Instability: A Critical Survey Illustrated With Exports Series," Journal of Economic Surveys, Wiley Blackwell, vol. 29(1), pages 1-26, 02.
  36. Lambsdorff, Johann Graf, 2002. "Corruption and Rent-Seeking," Public Choice, Springer, vol. 113(1-2), pages 97-125, October.
  37. Frederick Van der Ploeg, 2010. "Natural Resources: Curse or Blessing?," CESifo Working Paper Series 3125, CESifo Group Munich.
  38. Dani Rodrik, 2000. "Participatory Politics, Social Cooperation, and Economic Stability," American Economic Review, American Economic Association, vol. 90(2), pages 140-144, May.
  39. Alderman, Harold, 1996. "Saving and economic shocks in rural Pakistan," Journal of Development Economics, Elsevier, vol. 51(2), pages 343-365, December.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:fdi:wpaper:1631. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Vincent Mazenod)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.