A study on the inflation-corruption relationship in developing countries

This study examines the impact of inflation on corruption perception in 52 developing countries for the period 2012-2023. The analysis employs Fixed Effects (FE) and Random Effects (RE) models, incorporating governance indicators such as political stability, rule of law, government effectiveness, and regulatory quality, along with macroeconomic variables like real GDP per capita, trade openness, foreign direct investment, urbanization rate, and unemployment rate. The results indicate that inflation has a negative and statistically significant effect on corruption perception. High inflation rates create economic instability, weakening the effectiveness of public institutions and increasing corruption. In contrast, GDP per capita and governance quality indicators show positive effects on improving corruption perception. These findings underscore the importance of achieving economic stability and enhancing governance quality in the fight against corruption.