The Intriguing Nexus Between Corruption and Capital Account Restrictions
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Date
2005-11
Publication Type
Working Paper
ETH Bibliography
yes
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Abstract
The paper develops a theoretical model showing a mutual relationship between corruption and capital account restrictions. According to the model, higher corruption induces stricter restrictions and vice versa. We test the model using panel data for 112 countries over the period 1984-2002 and find that corruption and restrictions are indeed mutually determined. Estimating the model simultaneously, capital account restrictions induce higher corruption. Higher corruption, in turn, is associated with more restrictions on the capital account. The empirical relationship is, however, not completely robust.
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published
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Journal / series
Volume
113
Pages / Article No.
Publisher
KOF Swiss Economic Institute, ETH Zurich
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Subject
Dynamic panel; CORRUPTION + BRIBERY (POLITICS); KORRUPTION + BESTECHLICHKEIT (POLITIK); CAPITAL MARKET; ECONOMIC MODELS; KAPITALMARKT; WIRTSCHAFTSMODELLE; Corruption; Capital account restrictions
Organisational unit
02525 - KOF Konjunkturforschungsstelle / KOF Swiss Economic Institute