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CORRUPTION AND GROWTH UNDER WEAK IDENTIFICATION
Author(s) -
SHAW PHILIP,
KATSAITI MARINASELINI,
JURGILAS MARIUS
Publication year - 2011
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.2009.00276.x
Subject(s) - language change , economics , identification (biology) , econometrics , investment (military) , macroeconomics , political science , law , art , botany , literature , politics , biology
The goal of this paper is to revisit Paolo Mauro's influential paper on corruption and growth focusing on the strength of his results under weak identification. The instrument used in his original paper is found to be “weak” as defined by the literature on weak instruments. Our results suggest that there is a high probability that the parameters of interest are locally almost unidentified. We also investigate other instruments commonly used in the corruption literature and obtain similar results. After identifying an instrument with sufficient strength, we fail to reject a zero effect of corruption on investment and economic growth. ( JEL C31, D73)