Control of corruption and inflation tax: new evidence from selected developing countries

Corruption is one of the most important factors harms all aspects of macroeconomic performances in all countries especially developing countries. In this paper the impact of corruption on inflation tax in selected developing countries was investigated. In an earlier work(dagger) we applied Corruption Perception Index (CPI) for corruption and used different defmitions of inflation tax. However,present paper employs Control of Corruption Index (CCI) as a measurement of corruption and also apply different defmitions for inflation tax. The study concentrated on a sample of 40 countries consist of Middle East and North Africa countries and other selected developing countries, for which necessary data were available for the period 2003-2010. Our findings based on a panel data regression model support the view of a positive relationship between corruption and inflation tax. Therefore, policies to alleviate corruption are recommended in these countries. (C) 2012 Published by Elsevier Ltd. Selection and/or peer review under responsibility of Prof. Dr. Huseyin Arasli