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The Consequences of Corruption on Inflation in Developing Countries: Evidence from Panel Cointegration and Causality Tests

1
Department of Economics, Necmettin Erbakan University, Konya 42090, Turkey
2
Department of Economics, Ahi Evran University, Kırsehir 40100, Turkey
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Author to whom correspondence should be addressed.
Economies 2017, 5(4), 49; https://doi.org/10.3390/economies5040049
Received: 6 October 2017 / Revised: 20 November 2017 / Accepted: 30 November 2017 / Published: 11 December 2017
Up until the 1980s, studies on corruption were dominated by disciplines of public administration and sociology. In the following years, however, economists have also provided a good amount of research on this issue. According to Transparency International Agency, corruption, which has a negative impact on most macroeconomic indicators, is “the abuse of entrusted power for private gain”. Even though the disruption of corruption causing weak growth and investment rates has long been examined, there is little evidence regarding its impact on inflation. In this study, the nexus between corruption and inflation was investigated for 20 countries over the period 1995–2015. Estimation results indicated that high corruption increased inflation rates, and that there was a unidirectional causal relationship from corruption to inflation for ten countries in the sample. View Full-Text
Keywords: corruption; inflation; heritage foundation; panel data analysis corruption; inflation; heritage foundation; panel data analysis
MDPI and ACS Style

Özşahin, Ş.; Üçler, G. The Consequences of Corruption on Inflation in Developing Countries: Evidence from Panel Cointegration and Causality Tests. Economies 2017, 5, 49.

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