Abstract
Corruption usually harms all aspects of macroeconomic performances of all countries around the World especially the developing world. The purpose of the present paper is to investigate the impact of corruption on inflation tax in MENA countries. In a previous paper1, we used Corruption Perception Index (CPI) as a definition of corruption and applied Friedman, International Bank and Vito Tanzi definitions for inflation tax. We concluded that, there is a positive and significant relationship between corruption and inflation tax. In this paper, we used two different indices for corruption; Corruption Perception Index (CPI) and Control of Corruption Index (CCI) to investigate the sensitivity to different definition of corruption. To do so, we have concentrated on a sample of 17 developing countries from Middle East and North Africa countries for which the necessary data were available for the period 2003-2008. We have used two different indices for corruption; Corruption Perception Index (CPI) and Control of Corruption Index (CCI). Our findings based on panel data (we used unbalanced panel data because of missing data) regression models indicate that in general a positive relationship between corruption and inflation tax exists. In other words, the higher is the corruption the higher will be the inflation tax. Therefore, according to the results, governments have to try to use policies reducing corruption.
Highlights
Introduction and LiteratureIn recent years, and especially in the 1990s, a phenomenon broadly referred to as corruption has attracted a great deal of attention
Corruption can be effective in creation of inflation tax through budget deficit
The results show that, in MENA countries, the more increase at corruption will lead to more inflation tax and the more control of corruption will contribute to less inflation tax
Summary
Especially in the 1990s, a phenomenon broadly referred to as corruption has attracted a great deal of attention. Kautilya, the Corruption, defined as the misuse of public office for private gain, has attracted a great deal of attention in recent years. The general relationship between corruption and inflation tax has been identified in some empirical studies indirectly (Blackburn, Neanidis and Haque, 2009). These and other investigations (including theoretical work) provide insight into the many channels through which corruption might take effect
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
