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Corruption, growth, and growth volatility

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  • Evrensel, Ayse Y.

Abstract

While the existing studies focus on the corruption-growth relationship, this paper introduces a new focus involving corruption and growth volatility. The Ehrlich-Lui (1999) framework provides the theoretical background of the paper, which produces testable hypotheses regarding the corruption-growth and the corruption-growth volatility relationship. The cross-section dataset that is used in the empirical analysis contains 121 developed and developing countries. In terms of the relationship between the governance-related variables and growth rates, only corruption control and government effectiveness significantly and adversely affect the average growth rate. Regarding the relationship between growth volatility and governance-related variables, the results suggest that higher corruption control, expropriation risk control, government effectiveness, and government consumption decrease growth volatility.

Suggested Citation

  • Evrensel, Ayse Y., 2010. "Corruption, growth, and growth volatility," International Review of Economics & Finance, Elsevier, vol. 19(3), pages 501-514, June.
    • Handle: RePEc:eee:reveco:v:19:y:2010:i:3:p:501-514
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