Political Parties, Business Groups, and Corruption in Developing Countries

By Vineeta Yadav | Go to book overview

APPENDIX A

The Tobit “Right-Censored” Model

As emphasized earlier in chapter 6, the dependent variable Corruption (ICRG, TI, and WB) — denoted as y—may be potentially censored from above (specifically 6 in the ICRG case, 10 for the TI measure, and 5 for the WB measure). In order to account for the right censoring problem in the dependent variable when estimating the empirical model—while retaining the OLS assumption of normally distributed errors—I employ the Tobit model (Maddala 1983; Tobin 1958) with a lagged latent dependent variable. This model is formally defined as:

where yit* is the dependent variable, θ is the threshold for right censoring, y is the lag of the observed dependent variable, t= 1,…., T and i = 1,…., N. The vector of explanatory variables is given by xit with β as its associated vector of coefficients. Since the data is TSCS, I estimate the Tobit model (with a lagged dependent variable) via fixed effects.

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Political Parties, Business Groups, and Corruption in Developing Countries
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • List of Figures viii
  • List of Tables x
  • Acknowledgments xi
  • 1 - Introduction 3
  • 2 - Institutions, Lobbying, and Corruption- A Theoretical Framework 24
  • 3 - Case Studies- Legislative Institutions in Brazil and India 57
  • 4 - Brazil and India- Legislative Institutions and Lobbying Behavior 81
  • 5 - Brazil and India- Business Lobbying and Corruption 114
  • 6 - Legislative Institutions, Party Control, and Corruption- The Empirical Evidence 152
  • 7 - Conclusion 188
  • Appendix A 207
  • Appendix B 209
  • Notes 213
  • References 231
  • Index 251
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