The transition of corruption institutions and dynamics

Abstract The paper analyzes the strong but complex relation between corruption and development. corruption/honesty index is explained by three variables measuring aspects of development: Income, Polity Fraser (for Economic Freedom). last two indices represent political economic system. Two problems arise: (i) Development a common factor in all four variables, giving confluence, so it difficult to sort out contribution each explanatory variable. However, kernel regressions on corruption/income scatter give well-defined long-run transition path, which permits an identification specific contributions institutions corruption. (ii) correlation first difference development negative. This gives substantial lag form wide J-curves, main direction causality still from High income modern cause low after some time. corruption/development-relation fuzzy connection.