The Mystery of The Correlation Between The Corruption Perception Index and Related Variables in Indonesia

Abstract

This study aims to investigate the long-term and short-term relationship between a number of factors that influence the corruption perception index in Indonesia, including poverty, tax revenues, and government spending. This research uses Dynamic ARDL. This study uses the World Bank as a source for statistical data, namely data from 2000 to 2020. The findings of this study are an index of perceptions of corruption and tax revenue, having long and short-term associations, as well as an index of perceptions of corruption in the previous year which in the short term is tax revenue. significant positive effect on the corruption perception index. Correspondingly, government spending also has a significant positive effect on the corruption perception index. In contrast to the relationship between poverty and the corruption perception index, it means that poverty does not affect the corruption perception index. This shows that an increase in tax revenues and government spending in the short term has an effect on increasing the corruption perception index. However, in the long term, it will have the opposite effect in Indonesia.