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Governmental decentralization and corruption revisited: Accounting for potential endogeneity

Sanchari Choudhury

Economics Letters, 2015, vol. 136, issue C, 218-222

Abstract: The causal effect of governmental decentralization on firm-level corruption is inconclusive due to the difficulty in obtaining a traditional instrumental variable. Circumventing the issue by using the Lewbel (2012) identification strategy, we find mild evidence of political decentralization being endogenous but no support for fiscal decentralization being endogenous.

Keywords: Corruption; Decentralization; Endogeneity; Heteroskedasticity; Instrumental variables (search for similar items in EconPapers)
JEL-codes: C31 D73 H10 (search for similar items in EconPapers)
Date: 2015
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Handle: RePEc:eee:ecolet:v:136:y:2015:i:c:p:218-222