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Interlinkages between public expenditures, non-tax government revenues and corruption in the transition economies

Author

Listed:
  • Alper Ozun
  • Hasan Murat Ertuğrul
  • Ergul Haliscelik

Abstract

Purpose - This article examines potential impacts of increase in non-tax government revenues and public expenses on corruption for 11 transition economies in the Central and Eastern Europe. Design/methodology/approach - The empirical analysis uses yearly panel datasets and employs second-generation panel data models which take cross-sectional dependency and slope heterogeneity into account. Findings - The empirical results reveal the fact that there is a strong linkage between public expenses and corruption and a weak linkage between non-tax revenue collection and corruption in the transition economies. We perform the same analysis by using data sets from G-7 countries but do not notice any linkages between those variables. Research limitations/implications - The research topic requires further discussion on constitutional political economy to digest the empirical findings. Thus, an extended version combined with political economic approach might be useful. Practical implications - Through economic transitions, there might be a linkage between public expenditures and corruption index. Thus, public spending might be controlled by using constitutional economics policies. Originality/value - This paper is the first empirical work in the literature, which examines if there is a linkage between corruption and public expenditures and government tax income structure by using panel data sets. Moreover, it compares the results from transition countries with those of G-7 countries and provides certain policy suggestions in the context of constitutional economics.

Suggested Citation

  • Alper Ozun & Hasan Murat Ertuğrul & Ergul Haliscelik, 2024. "Interlinkages between public expenditures, non-tax government revenues and corruption in the transition economies," Journal of Capital Markets Studies, Emerald Group Publishing Limited, vol. 8(2), pages 242-254, October.
  • Handle: RePEc:eme:jcmspp:jcms-08-2024-0041
    DOI: 10.1108/JCMS-08-2024-0041
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    More about this item

    Keywords

    Transition economies; Constitutional economics; Corruption; Tax revenue; Dynamic CCEMG model; H20; D73; C33;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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