Corruption and public debt: a cross-country analysis

Luigi Benfratello, Alfredo Del Monte and Luca Pennacchio

Applied Economics Letters, 2018, vol. 25, issue 5, 340-344

Abstract: Using data from a large panel of countries over the period 1995–2015, this article empirically investigates the effect of corruption on public debt. Overall, the estimates reveal that corruption increases public debt. The effect, however, appears to be heterogeneous across income-related sample splits: it is stronger for advanced economies, but weaker and less statistically robust for less-developed countries, where external factors such as foreign aid may also affect public debt. The analysis suggests the inadequacy of conventional wisdom assuming that more detrimental fiscal effects of corruption arise in low-income countries.

Date: 2018
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DOI: 10.1080/13504851.2017.1321831

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