Corruption Effects on Budget Deficit

Financial corruption is a complicated, multi-dimensional phenomenon with multiple causes and factors, and it takes various forms and roles in different situations. The realm of financial corruption includes a wide spectrum from an individual act of bribery to an extensive criminal act encompassing all pillars of the political and economical system. Financial corruption is sometimes considered as a structural issue within politics and economics, and sometimes as a cultural and moral problem. In this regard, the main aim of this paper is to analyze the theoretic connection and the effect of control of corruption on budget deficit in selected countries.. The results from estimating the model by the Fixed Effects Method and the Generalized Method of Moments in selected countries in the period 2002-2013 show that control of corruption has a positive and meaningful effect on budget deficit in selected countries.