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    Live Free Or Bribe: On The Causal Dynamics Between Economic Freedom and Corruption in U.S. States

    Access Status
    Fulltext not available
    Authors
    Apergis, Nicholas
    Dincer, O.
    Payne, J.
    Date
    2012
    Type
    Journal Article
    
    Metadata
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    Citation
    Apergis, Nicholas and Dincer, Oguzhan C. and Payne, James E. 2012. Live Free Or Bribe: On The Causal Dynamics Between Economic Freedom and Corruption in U.S. States. European Journal of Political Economy. 28 (2): pp. 215-226.
    Source Title
    European Journal of Political Economy
    DOI
    10.1016/j.ejpoleco.2011.10.001
    ISSN
    0176-2680
    URI
    http://hdl.handle.net/20.500.11937/29915
    Collection
    • Curtin Research Publications
    Abstract

    We investigate the relationship between economic freedom and corruption using data from U.S. states covering almost a quarter of a century. Our study advances the existing literature on several fronts. First, instead of using subjective cross-country corruption indices assembled by various investment risk services, we use a more objective measure of corruption: the number of government officials convicted in a state for crimes related to corruption. Second, unlike previous studies, we exploit both time series and cross-sectional variation in the data in the estimation of a panel error correction model. The panel error correction model results show that in the long-run economic freedom, per capita income, and education have a negative and statistically significant impact on corruption whereas income inequality has a positive and statistically significant impact. The causality tests associated with the panel error correction model reveal bidirectional causality between economic freedom and corruption in both the short-run and long-run.

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