Corruption, inflation and income distribution in transition economies: the Balkan region

Abstract

This dissertation is an empirical analysis on the trends and correlations concerning corruption, inflation and income inequality relative to ten countries belonging to the Balkan region -nine transition economies plus Greece- ever since the fall of the iron curtain. Thus, we have used Transparency International's Corruption Perception Index and the World Bank’s Control of Corruption Indicator as proxies for corruption; the Consumer Price Index and the GDP de deflator to measure inflation; and the GINI Index to examine income distribution. The first chapters are devoted to describing the evolution of the aforesaid variables as well as other complementary indicators. Moreover, we also developed two dummy variables -European Union membership and belonging to the former Yugoslav federation- with the aim of finding out whether these two aspects had a significant impact on their performance regarding the former aspects. Subsequently, we performed different econometric methods using the former data and other additional variables, these being: Simple Linear Regression, Multiple Linear Regression, and Panel Data. Finally, we run the Hausman test on the Panel Data models so as to discover whether the Fixed-effects or Random-Effects models were more accurate. The results of the former have shown in all cases that the Fixed-effects models are always more consistent, thus entailing that the results achieved according to this kind of models are more reliable in every case.