On the relationship between income and control of corruption in the Eurozone

Abstract

This study uses panel Granger causality and cointegration tests to examine the relationship between income per capita and control of corruption in the Eurozone. The analysis covers the entire Eurozone and subgroups of countries from 2002 to 2021. The results show that there is not a bidirectional predictive causal relationship between growth and the increase of control of corruption in the Eurozone. The Great Recession has had a significant impact on the relationship between control of corruption and income per capita, leading to a disconnection between the two variables after 2008, except for Eastern countries. A cointegrated relationship between these variables is found in Estonia, Latvia, Lithuania, Slovakia, and Slovenia. Policymakers need to tailor anti-corruption measures to the specific institutional contexts of each country in the Eurozone.

Keywords

• corruption
• eurozone
• income
• panel cointegration
• panel granger causality