 The corruption mark-up: is corruption cost incorporated in the prices of goods and services in emerging and developed countries?Jelena Budak () and Maruška Vizek Post-Communist Economies, 2015, vol. 27, issue 2, 247-255 Abstract: We use panel data models on a dataset covering 32 European countries in order to investigate the effect of corruption on the aggregate price level. Along with modeling the overall price level, we also separately model the price levels of consumer goods and consumer services, controlling for other factors that commonly influence the price level in an economy, such as income, trade openness, fiscal dominance, the intensity of local market competition and real money supply. Our results suggest that, in addition to already established adverse economic outcomes of corruption (such as lower growth, an inefficient public sector, underinvestment and increased cost of doing business), corruption in emerging economies also increases the general price level, thus in turn affecting the overall cost of living. This effect of corruption is twice as strong for consumer services as for consumer goods. Unlike in emerging countries, in developed countries corruption does not seem to affect price level determination. Date: 2015 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:pocoec:v:27:y:2015:i:2:p:247-255 Ordering information: This journal article can be ordered from DOI: 10.1080/14631377.2015.1026702 Access Statistics for this article Post-Communist Economies is currently edited by Roger Clarke More articles in Post-Communist Economies from Taylor & Francis Journals |
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