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Corruption as a response to regulation

Author

Listed:
  • Noel D., Johnson
  • William, Ruger
  • Jason, Sorens
  • Steven, Yamarik

Abstract

Previous research has found a negative effect of corruption on growth in the United States. However, some theory suggests corruption might have a positive impact in places with dysfunctional political institutions. This paper investigates whether the corruption-growth link is conditional on the extent of government involvement across U.S. states. Even though no state approaches the level of government intervention found in many developing countries, we still find evidence that corruption’s harmful effects on growth are smaller when regulation is greater.

Suggested Citation

  • Noel D., Johnson & William, Ruger & Jason, Sorens & Steven, Yamarik, 2012. "Corruption as a response to regulation," MPRA Paper 36873, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:36873
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    File URL: https://mpra.ub.uni-muenchen.de/36873/1/MPRA_paper_36873.pdf
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    References listed on IDEAS

    as
    1. Egger, Peter & Winner, Hannes, 2005. "Evidence on corruption as an incentive for foreign direct investment," European Journal of Political Economy, Elsevier, vol. 21(4), pages 932-952, December.
    2. Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1991. "The Allocation of Talent: Implications for Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 503-530.
    3. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
    4. Pierre-Guillaume Méon & Khalid Sekkat, 2005. "Does corruption grease or sand the wheels of growth?," Public Choice, Springer, vol. 122(1), pages 69-97, January.
    5. Francis T. Lui, 1996. "Three Aspects Of Corruption," Contemporary Economic Policy, Western Economic Association International, vol. 14(3), pages 26-29, July.
    6. Levy, Daniel, 2007. "Price adjustment under the table: Evidence on efficiency-enhancing corruption," European Journal of Political Economy, Elsevier, vol. 23(2), pages 423-447, June.
    7. Solow, Robert M., 2000. "Growth Theory: An Exposition," OUP Catalogue, Oxford University Press, edition 2, number 9780195109030.
    8. Gasper A. Garofalo & Steven Yamarik, 2002. "Regional Convergence: Evidence From A New State-By-State Capital Stock Series," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 316-323, May.
    9. 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.
    10. Noel Johnson & Courtney LaFountain & Steven Yamarik, 2011. "Corruption is bad for growth (even in the United States)," Public Choice, Springer, vol. 147(3), pages 377-393, June.
    11. Thomas A. Garrett & Russell M. Rhine, 2011. "Economic freedom and employment growth in U.S. states," Review, Federal Reserve Bank of St. Louis, issue Jan, pages 1-18.
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    13. Goel, Rajeev K & Nelson, Michael A, 1998. "Corruption and Government Size: A Disaggregated Analysis," Public Choice, Springer, vol. 97(1-2), pages 107-120, October.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Corruption; U.S. States; Growth; Regulation;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior

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