Investigating the Interaction Effect of Democracy and Economic Freedom on Corruption: A Cross-Country Quantile Regression Analysis

Shrabani Saha () and Jen-Je Su ()
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Shrabani Saha: School of Accounting Finance and Economics, Edith Cowan University, 270 Joondalup Drive, Joondalup, WA-6027, Australia
Jen-Je Su: Department of Accounting, Finance and Economics, Griffith University, Nathan QLD 4111, Australia

Economic Analysis and Policy, 2012, vol. 42, issue 3, 389-396

Abstract: This paper explores the interaction effects of economic freedom and democracy in controlling corruption for 100 countries by using quantile regression technique. The main contribution is to explore the interaction effects throughout conditional distribution of corruption across nations. Our results reinforce some findings in the literature, but also provide new conclusions. The findings suggest a stronger and significant interaction effect in reducing corruption, especially in the most-corrupt countries. However, democratic and economic freedoms alone may not cure corruption effectively in the most-corrupt nations, a sound democratic reform can eliminate corruption substantially only after achieving a threshold level of economic freedom.

Keywords: Corruption; Democracy; Economic freedom; Quantile regression (search for similar items in EconPapers)
JEL-codes: C23 K42 O50 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:42:y:2012:i:3:p:389-396

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