The Relationship between Corruption and Government Revenues : A Time Series Analysis of the Turkish Case, 1980-2005

Corruption defined as the misuse of public power for personal gains is a forefront issue around the world, especially in developing countries. This paper mainly assumes that corruption has negative effects on government revenues both in the short-run and the long-run. In order to test this assumption, we apply for the time series analysis of cointegration and error correction models to our hypotheses by using the Turkish data over the period of 1980 to 2005. The estimation results, in general, confirm the hypotheses we assume except for those associate corruption with income tax revenues (INCTR), corporate tax revenues (CTR) and tax revenues (TR)