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    Central bank independence, bureaucratic corruption and fiscal responses - empirical evidence

    Dimakou, Ourania (2010) Central bank independence, bureaucratic corruption and fiscal responses - empirical evidence. Working Paper. Birkbeck College, University of London, London, UK.

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    Abstract

    This paper analyses the impact of bureaucratic corruption on fiscal policy outcomes for economies that have constituted to a greater or lessen extent independent central banks. The adverse implications of corruption on debt accumulation are verified using a cross-sectional setting of 77 developed and developing countries. Approximating central bank independence as that point in time that a major central bank reform took effect, we find that more corruption leads to higher debt accumulation. More importantly, complementing the analysis with a measure for the level of independence each reform gave strengthens the results; the impact of corruption is greater, the higher the independence that was granted. The findings are robust to different subsets of the sample and different sets of control variables. Suboptimal institutional quality poses difficulties on the achievement of a balanced debt process, which could obstacle price stability, despite the constitution of independent central banks.

    Metadata

    Item Type: Monograph (Working Paper)
    Additional Information: BWPEF 1012
    Keyword(s) / Subject(s): Central Bank Independence, Corruption
    School: Birkbeck Schools and Departments > School of Business, Economics & Informatics > Economics, Mathematics and Statistics
    Depositing User: Administrator
    Date Deposited: 20 Jun 2013 12:21
    Last Modified: 20 Jun 2013 12:32
    URI: http://eprints.bbk.ac.uk/id/eprint/7530

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