CORRUPTION AND GROWTH UNDER WEAK IDENTIFICATION |
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| Authors: | PHILIP SHAW MARINA‐SELINI KATSAITI MARIUS JURGILAS |
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| Institution: | 1. Shaw: Assistant Professor, Fairfield University, Fairfield, CT. Phone 1‐203‐254‐4000 (ext 2270), Fax 1‐860‐486‐0204, E‐mail pshaw@mail.fairfield.edu;2. Katsaiti: Department of Economics, University of Connecticut, 341 Mansfield Road Unit 1063, Storrs, CT 06269. Phone 30‐210‐368‐9377, Fax 30‐210‐368‐9352, E‐mail marina‐selini.katsaiti@uconn.edu;3. Jurgilas: Assistant Professor, Elon University, Elon, NC. Phone 1‐919‐809‐7266, Fax 1‐336‐278‐5952, E‐mail mjurgilas@elon.edu |
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| Abstract: | 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) |
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