MORE MONEY, MORE PROBLEMS: BUSINESS CYCLES AND CORRUPTION IN THE UNITED STATES 2000-2012

Abstract

This paper investigates the effect state business cycles have on corruption as well as the effect of permanent state income on state corruption levels. Using state level data from 2000-2012 this paper finds weak evidence that corruption increases with transitory income increases, but increases in permanent income over the longer term, cause corruption to fall. It also finds significant evidence that states with higher urban populations have lower levels of corruption. Key Words: Corruption, Business Cycle, United States, State-Level, Short-term, Long-term