Working Paper
Taxation, Corruption and the Exchange Rate Regime
Carsten Hefeker
CESifo, Munich, 2009
CESifo Working Paper No. 2561
CESifo, Munich, 2009
CESifo Working Paper No. 2561
![](https://cesifo.org/DocImg/cesifo1_wp2561.jpg?c=1689236906)
The paper analyzes the relation between institutional quality, such as corruption, in a country and its monetary regime. It is shown that a credibly fixed exchange rate to a low inflation country, like a currency board, can reduce corruption and improve the fiscal system. A monetary union, however, has ambiguous effects. I find that there is convergence between countries with regard to the level of corruption.
CESifo Category
Monetary Policy and International Finance
Monetary Policy and International Finance
Keywords: exchange rate regime, monetary policy, fiscal policy, seigniorage, corruption, developing and transition countries
JEL Classification: D720,E630,F330