Economic Freedom Versus Political Freedom: Cross-Country Influences on Corruption

13 Pages Posted: 26 Jun 2005

See all articles by Rajeev K. Goel

Rajeev K. Goel

Illinois State University - Department of Economics

Michael A. Nelson

University of Akron - Department of Economics

Abstract

Using a well-known index of corruption, this paper examines the determinants of corruption for a large sample of countries. Specifically, the present study brings empirical evidence to bear on the question of whether economic freedom or political freedom serves as a deterrent to corrupt activity. In particular, does greater economic freedom or greater political freedom yield a more 'clean' society? Our results show that greater economic freedom seems to matter more in this regard. Examining different components of economic freedom, we find that not all these components are equally effective in reducing corruption. For instance, monetary policy seems to have a stronger influence on the level of corrupt activity in a country than fiscal policy. Robustness of these findings is checked and policy implications are discussed.

Suggested Citation

Goel, Rajeev K. and Nelson, Michael A., Economic Freedom Versus Political Freedom: Cross-Country Influences on Corruption. Australian Economic Papers, Vol. 44, No. 2, pp. 121-133, June 2005. Available at SSRN: https://ssrn.com/abstract=739366

Rajeev K. Goel (Contact Author)

Illinois State University - Department of Economics ( email )

Normal, IL 61790-4200
United States

Michael A. Nelson

University of Akron - Department of Economics ( email )

Akron, OH 44325
United States
330-972-7939 (Phone)
330-972-5356 (Fax)

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