Fiscal consequences of public corruption: Empirical evidence from state bond ratings
- 548 Downloads
Empirical analyses of public corruption focus predominantly on international differences; regional differences in public corruption within a single country receive little attention. We empirically investigate the effect of public corruption in the United States on state bond ratings, which previous research shows are inversely related to net interest costs on public debt. After controlling for various economic influences on bond ratings, we find that more corrupt states have lower bond ratings, which implies that taxpayers in more corrupt states face a negative pecuniary externality by paying a premium for debt.
KeywordsEmpirical Evidence Empirical Analysis Regional Difference Public Finance Public Debt
Unable to display preview. Download preview PDF.
- Alesina, A., & Weder, B. (2002). Do corrupt governments receive less foreign aid? American Economic Review, 92(4),1126–1137.Google Scholar
- Becker, G.S. (1968). Crime and punishment: An economic approach. Journal of Political Economy, 76(2), 169–217.Google Scholar
- Bliss, C., & Di Tella, R. (1997). Does competition kill corruption? The Journal of Political Economy, 105(5), 1001–1023.Google Scholar
- Burguet, R., & Che, Y.-K. (2004). Competitive procurement with corruption. RAND Journal of Economics, 35(1), 50–68.Google Scholar
- Ehrlich, I., & Lui, F.T. (1999). Bureaucratic corruption and endogenous economic growth’. The Journal of PoliticalEconomy, 107(6), S270–S293.Google Scholar
- Fredricksson, P.G., List, J.A., & Millimet, D.L. (2003). Bureaucratic corruption, environmental policy and inbound U.S. F, DI:Theory and Evidence. Journal of Public Economics, 87, 1407–1430.Google Scholar
- Jacobs, J.B. (1999). Dilemmas of corruption control. In: Perspectives on crime and justice: 1998ö–1999 Lecture Series.Washington, D.C.: Department of Justice, pp. 73–93.Google Scholar
- Liu, P., & Thakor, A.V. (1984). Interest yields, credit ratings, and economic characteristics of state bonds: An empirical analysis: Note. Journal of Money, Credit, and Banking, 16(3), 344–351.Google Scholar
- Mauro, P.: (1995). Corruption and growth. The Quarterly Journal of Economics, 110(3), 681–712.Google Scholar
- Mauro, P.: (1997). The Effects of corruption on growth, investment, and government expenditure: A cross-country analysis. In: Corruption and the global economy. Washington, D.C.: Institute forInternational Economics, pp. 83–107.Google Scholar
- Myrdal, G. (1968). Asian Drama: An Enquiry in the Poverty of Nations, Vol. 2. New York: The Twentieth Century Fund.Google Scholar
- Public Integrity Section, Criminal Division, U.S. Department of Justice: 2001, ‘Report to Congress on the Activities and Operations of the Public Integrity Section for 2001’. http://www.usdoj.gov/criminal/pin/Annual_Report_2001.pdf.
- Public Integrity Section, Criminal Division, U.S. Department of Justice: 2002, Report to Congress on the Activities and Operations of the Public Integrity Section for 2002. http://www.usdoj.gov/criminal/pin/AR_Final_2002.pdf.
- Rubinfeld, D.L. (1973). Credit ratings and the market for general obligation municipal bonds. National Tax Journal, 26(1),17–27.Google Scholar
- Shleifer, A., & Vishny, R.W. (1993). Corruption. The Quarterly Journal of Economics, 108(3), 599–617.Google Scholar