The Intriguing Nexus Between Corruption and Capital Account Restrictions

Axel Dreher and Lars-Hinrich Siemers ()

No 05-113, KOF Working papers from KOF Swiss Economic Institute, ETH Zurich

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.

Keywords: Corruption; Capital account restrictions; Dynamic panel (search for similar items in EconPapers)
Pages: 38 pages
Date: 2005-11
New Economics Papers: this item is included in nep-pbe and nep-reg
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Citations: View citations in EconPapers (31)

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http://dx.doi.org/10.3929/ethz-a-005104867 (application/pdf)

Related works:
Working Paper: The Intriguing Nexus Between Corruption and Capital Account Restrictions (2005)
Working Paper: The Intriguing Nexus between Corruption and Capital Account Restrictions (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:kof:wpskof:05-113

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