Joint discussion paper series in economics 2009,11
The paper analyzes the relation between institutional quality, such as corruption, in a country and its monetary regime. It is shown that a credibly …xed exchange rate to a low in‡ation country, like a currency board, can reduce corruption and improve the …scal system. A monetary union, however, has ambiguous e¤ects. I …nd that that there is convergence between countries with regard to the level of corruption.
Exchange Rate Regime Monetary Policy Fiscal Policy Seigniorage, Corruption Developing and Transition Countries