The effects of federal regulations on corruption in U.S. States

Dincer O., Gunalp B.

European Journal of Political Economy, vol.65, 2020 (SSCI, Scopus) identifier

  • Publication Type: Article / Article
  • Volume: 65
  • Publication Date: 2020
  • Doi Number: 10.1016/j.ejpoleco.2020.101924
  • Journal Name: European Journal of Political Economy
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, Academic Search Premier, International Bibliography of Social Sciences, Business Source Elite, Business Source Premier, EconLit, Political Science Complete, Public Affairs Index, Social services abstracts, Sociological abstracts, Worldwide Political Science Abstracts, DIALNET
  • Keywords: Corruption, Economic freedom, FRASE Index, U.S. States
  • Hacettepe University Affiliated: No

Abstract

Using the newly constructed Federal Regulation and State Enterprise Index (FRASE Index) to measure the federal regulations and the existing Corruption Convictions Index (CCI), we investigate the effects of federal regulations on corruption in U.S. states. Controlling for several demographic and economic variables including the Fraser Institute's Economic Freedom Index (EFI), which measures the size and scope of government in U.S. states, we find a positive and statistically significant relationship between federal regulations and corruption. Our findings have important policy implications. A 1 standard deviation increase in FRASE Index causes CCI to increase by approximately 0.5 standard deviations. Standardized coefficient of EFI is also approximately equal to 0.5. In other words, it is possible to mitigate the effects of regulations at the federal level by reducing the size and the scope of the government at the state level.