Impact Of Corruption On Inflation: Evidence From Developed And Developing Countries

Abstract

The paper investigated the influence of Corruption measured by the Corruption Perception Index (CPI) on Inflation in the period from 2010 to 2019, including 200 observations of 20 countries from both developed and developing countries. Besides, the research is also interested in whether the degree of interaction term which is Money Supply affects the relationship between Corruption and Inflation. We use the White test to verify the homoskedasticity assumption prior to running the model. Because the White test result is significant, robust standard errors are utilized to provide results that can be more reliable. After using multiple regression analysis, our study discovered that Corruption has a negative impact on the Inflation of both developed and developing countries. The empirical finding also suggests that nations with larger Money Supply have less severe effects of Corruption on Inflation.