Can the exchange rate regime influence corruption?

Arbeitspapier

This paper analyses the influence of the exchange rate regime of a country on the level of tolerated corruption with a special focus on the interdependency of monetary and fiscal policies. Using a simple theoretical framework based on Barro-Gordon-Model I compare independent monetary policy with a tight peg arrangement in order to find out which regime is more likely to induce governments to intensify the fight against corruption. It is shown that if corruption has a considerable positive impact on output, a tight peg regime can increase tolerated corruption. However, if corruption has a negative effect on output, a pegged exchange rate regime will lead to a lower level of tolerated corruption. The issue of particular interest appears to be the finding that a strong positive impact of corruption on output can induce governments to choose a pegging regime while a weak positive impact of corruption (and a negative influence of corruption even more) provides an incentive to keep monetary independence.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Volkswirtschaftliche Diskussionsbeiträge ; No. 148-11

Classification and Topics

• Classification: Wirtschaft ; Monetary Policy ; Central Banks and Their Policies ; Policy Objectives; Policy Designs and Consistency; Policy Coordination ; Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy ; International Monetary Arrangements and Institutions
• Subject: Exchange Rate Regime ; Monetary Policy ; Fiscal Policy ; Corruption ; Wechselkurssystem ; Korruption ; Stufenflexibilität ; Korruptionsbekämpfung ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Popkova, Katherina
• Event: Veröffentlichung
• (who): Universität Siegen, Fakultät III, Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht
• (where): Siegen
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/57260
• Last update: 10.03.2025, 11:43 AM CET