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Taxation, corruption and the exchange rate regime

  • Hefeker, Carsten

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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Paper provided by Hamburg Institute of International Economics (HWWI) in its series HWWI Research Papers with number 2-12.

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Date of creation: 2008
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Handle: RePEc:zbw:hwwirp:2-12
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