Does Oil Corrupt? Evidence from a Multivariate VAR in Iran

Mohammad Reza Farzanegan () and Reza Zamani
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Reza Zamani: Allameh Tabatab’i University

MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: We examine the response of the news-based Corruption Reflection Index (CRI) to positive shocks in oil revenues in Iran. Using annual data from 1962 to 2019, we employ the Vector Autoregressive (VAR) model and analyze impulse response functions. Our findings reveal a positive and significant response of corruption to oil shocks. The key channels through which this relationship operates include inflation, military spending, and the degradation of democratic institutions. Moreover, we provide a case study of clientelism in public investment projects in Iran from 2002 to 2012 and their impact on the public budget.

Keywords: Corruption; Oil rents, Resource curse; Conflict; Iran; VAR model (search for similar items in EconPapers)
Pages: 37 pages
Date: 2023
New Economics Papers: this item is included in nep-ara, nep-ene and nep-ger
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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:202321

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