20080106 Corruption and Political and Economic Reforms- A Structural Breaks Approach

Corruption and Political and Economic Reforms: A Structural Breaks Approach

In this paper we look at the impact of broad policy reforms on the levels of corruption. We use a structural break approach to identify countryspecific time periods in which significant shifts in corruption levels take place. We then correlate these times of change with a set of covariates with specific focus on the impact of democratization, and trade and equity market liberalization. We find robust support for the hypothesis that episodes of reduction in corruption levels tend to be correlated with democratization and equity market liberalization.