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Public Choice

, Volume 126, Issue 1–2, pp 75–85 | Cite as

Fiscal consequences of public corruption: Empirical evidence from state bond ratings

  • Craig A. DepkenII
  • Courtney L. Lafountain
Article

Abstract

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.

Keywords

Empirical Evidence Empirical Analysis Regional Difference Public Finance Public Debt 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer Science + Business Media, Inc. 2006

Authors and Affiliations

  1. 1.The University of Texas at ArlingtonArlingtonU.S.A.

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