Does Trust Matter? Corruption and Environmental Regulatory Policy in the United States

35 Pages Posted: 25 Oct 2013

See all articles by Oguzhan C. Dincer

Oguzhan C. Dincer

Illinois State University - Department of Economics; Illinois State University-Institute for Corruption Studies

Per G. Fredriksson

University of Louisville - College of Business - Department of Economics; Institute for Corruption Studies

Date Written: October 24, 2013

Abstract

This study shows that the level of trust matters for how corruption affects public policy outcomes in the long run, in particular with regard to the stringency of environmental policies. We argue that the level of trust affects the relative strength of industry and environmental lobby groups, and therefore the effects of corruption. We construct a unique index measuring the reflection of corruption in each state using Associated Press (AP) state news wires. We estimate the long-run cointegrating relationship between environmental policy, corruption, and trust using Dynamic OLS. We find that higher corruption reduces the stringency of environmental policies when the level of trust is low, but has little or no effect at higher levels of trust.

Keywords: Institutional Corruption, Corruption, Social Capital, Trust, Environmental Stringency

Suggested Citation

Dincer, Oguzhan C. and Fredriksson, Per G., Does Trust Matter? Corruption and Environmental Regulatory Policy in the United States (October 24, 2013). Edmond J. Safra Working Papers No. 28, Available at SSRN: https://ssrn.com/abstract=2344851 or http://dx.doi.org/10.2139/ssrn.2344851

Oguzhan C. Dincer (Contact Author)

Illinois State University - Department of Economics ( email )

Normal, IL 61790-4200
United States

Illinois State University-Institute for Corruption Studies ( email )

Stevenson Hall 425
Normal, IL 61790-4200
United States

Per G. Fredriksson

University of Louisville - College of Business - Department of Economics ( email )

Louisville, KY 40292
United States

Institute for Corruption Studies

Stevenson Hall 425
Normal, IL 61790-4200
United States

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