IDEAS home Printed from https://ideas.repec.org/a/taf/pocoec/v27y2015i2p247-255.html
   My bibliography  Save this article

The corruption mark-up: is corruption cost incorporated in the prices of goods and services in emerging and developed countries?

Author

Listed:
  • Jelena Budak
  • Maruška Vizek

Abstract

We use panel data models on a dataset covering 32 European countries in order to investigate the effect of corruption on the aggregate price level. Along with modeling the overall price level, we also separately model the price levels of consumer goods and consumer services, controlling for other factors that commonly influence the price level in an economy, such as income, trade openness, fiscal dominance, the intensity of local market competition and real money supply. Our results suggest that, in addition to already established adverse economic outcomes of corruption (such as lower growth, an inefficient public sector, underinvestment and increased cost of doing business), corruption in emerging economies also increases the general price level, thus in turn affecting the overall cost of living. This effect of corruption is twice as strong for consumer services as for consumer goods. Unlike in emerging countries, in developed countries corruption does not seem to affect price level determination.

Suggested Citation

  • Jelena Budak & Maruška Vizek, 2015. "The corruption mark-up: is corruption cost incorporated in the prices of goods and services in emerging and developed countries?," Post-Communist Economies, Taylor & Francis Journals, vol. 27(2), pages 247-255, June.
    • Handle: RePEc:taf:pocoec:v:27:y:2015:i:2:p:247-255
    DOI: 10.1080/14631377.2015.1026702
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/14631377.2015.1026702
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/14631377.2015.1026702?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Mr. Sanjeev Gupta, 1998. "Does Corruption Affect Income Inequality and Poverty?," IMF Working Papers 1998/076, International Monetary Fund.
    2. Paolo Mauro, 2004. "The Persistence of Corruption and Slow Economic Growth," IMF Staff Papers, Palgrave Macmillan, vol. 51(1), pages 1-1.
    3. Mr. Erwin H Tiongson & Mr. Hamid R Davoodi & Mr. Sanjeev Gupta, 2000. "Corruption and the Provision of Health Care and Education Services," IMF Working Papers 2000/116, International Monetary Fund.
    4. Mr. George T. Abed & Mr. Hamid R Davoodi, 2000. "Corruption, Structural Reforms, and Economic Performance in the Transition Economies," IMF Working Papers 2000/132, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Iva Tomic, 2016. "What drives youth unemployment in Europe?," Working Papers 1601, The Institute of Economics, Zagreb.
    2. Hongkang Xu & Mai Dao & Jia Wu, 2019. "The effect of local political corruption on earnings quality," Review of Quantitative Finance and Accounting, Springer, vol. 53(2), pages 551-574, August.
    3. Iva TOMIĆ, 2018. "What drives youth unemployment in Europe? Economic vs non‐economic determinants," International Labour Review, International Labour Organization, vol. 157(3), pages 379-408, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fisayo Fagbemi & Tolulope Temilola Osinubi & Geraldine Ejiaka Nzeribe & Taofik Olatunji Bankole, 2022. "Human Capital Development Challenge: Why Corruption Eradication is a Panacea in Nigeria," Journal of Development Policy and Practice, , vol. 7(2), pages 180-205, July.
    2. Anwar Shah, 2006. "Corruption and Decentralized Public Governance," Chapters, in: Ehtisham Ahmad & Giorgio Brosio (ed.), Handbook of Fiscal Federalism, chapter 19, Edward Elgar Publishing.
    3. Rahim M. Quazi, 2014. "Corruption and Foreign Direct Investment in East Asia and South Asia: An Econometric Study," International Journal of Economics and Financial Issues, Econjournals, vol. 4(2), pages 231-242.
    4. Tudorel Andrei & Ani Matei & Stelian Stancu & Bogdan Oancea, 2009. "Some notes about decentralization process implications on public administration corruption in romania," Prague Economic Papers, Prague University of Economics and Business, vol. 2009(1), pages 26-37.
    5. Joseph McKinney & Carlos Moore, 2008. "International Bribery: Does a Written Code of Ethics Make a Difference in Perceptions of Business Professionals," Journal of Business Ethics, Springer, vol. 79(1), pages 103-111, April.
    6. Anwar Shah, 2014. "Decentralized Provision of Public Infrastructure and Corruption," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1418, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    7. Rahim M. Quazi, 2014. "Effects Of Corruption And Regulatory Environment On Foreign Direct Investment: A Case Study Of Africa," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 8(4), pages 51-60.
    8. Yuriy Timofeyev, 2011. "How Corruption Affects Social Expenditures: Evidence From Russia," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 5(4), pages 39-51.
    9. Mohamed Ben Mimoun & Asma Raies, 2022. "Is social spending pro‐poor in developing countries? The role of governance and political freedom," Poverty & Public Policy, John Wiley & Sons, vol. 14(3), pages 214-241, September.
    10. Elena Gubar & Edgar Javier Sanchez Carrera & Suriya Kumacheva & Ekaterina Zhitkova & Galina Tomilina, 2018. "Games and Network Structures on Corruption, Income Inequality, and Tax Control," Working Papers 1808, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2018.
    11. Amira Mohamed Emara, 2020. "The Impact of Corruption on Human Development in Egypt," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 10(5), pages 574-589, May.
    12. Angélica Sánchez & Thomas Goda, 2018. "Corruption and the ‘Paradox of Redistribution’," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 140(2), pages 675-693, November.
    13. Policardo, Laura & Carrera, Edgar J. Sánchez, 2018. "Corruption causes inequality, or is it the other way around? An empirical investigation for a panel of countries," Economic Analysis and Policy, Elsevier, vol. 59(C), pages 92-102.
    14. Gephart, Malte, 2009. "Contextualizing Conceptions of Corruption: Challenges for the International Anti-corruption Campaign," GIGA Working Papers 115, GIGA German Institute of Global and Area Studies.
    15. Seifallah Sassi & Amira Gasmi, 2017. "The Dynamic Relationship Between Corruption–Inflation: Evidence From Panel Vector Autoregression," The Japanese Economic Review, Japanese Economic Association, vol. 68(4), pages 458-469, December.
    16. Kanyam, Daniel A. & Kostandini, Genti & Ferreira, Susana, 2017. "The Mobile Phone Revolution: Have Mobile Phones and the Internet Reduced Corruption in Sub-Saharan Africa?," World Development, Elsevier, vol. 99(C), pages 271-284.
    17. Bienvenido Ortega & Antonio Casquero & Jesús Sanjuán, 2016. "Corruption and Convergence in Human Development: Evidence from 69 Countries During 1990–2012," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 127(2), pages 691-719, June.
    18. Ricardo Montero & Gustavo Yamada, 2012. "Exclusión y discriminación étnica en los servicios públicos en el Perú," Chapters of Books, in: Francisco Galarza (ed.), Discriminación en el Perú: Exploraciones en el Estado, la empresa y el mercado laboral., edition 1, volume 1, chapter 5, pages 219-278, Fondo Editorial, Universidad del Pacífico.
    19. Konstantinos Angelopoulos & Apostolis Philippopoulos, 2005. "The Role of Government in Anti-Social Redistributive Activities," CESifo Working Paper Series 1427, CESifo.
    20. Karluk, S. Rıdvan & Unal, Umut, 2017. "Türkiye Ekonomisinde Yoksulluk, Yolsuzluk ve Gelir Dağılımı İlişkisi [Income Distribution, Poverty and Corruption in Turkey]," MPRA Paper 70118, University Library of Munich, Germany.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:pocoec:v:27:y:2015:i:2:p:247-255. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/CPCE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.