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This empirical research discusses the impacts of non-tax revenue and public expenses on any potential corruption in 11 transition economies in the Central and Eastern Europe. The empirical analysis uses yearly panel datasets and employs the common correlated effects group mean (CCEGM) model, which adds a dynamic nature into panel data analysis. The empirical results reveals the fact that there is a strong linkage between increase in non-tax revenues and public expenses towards corruption in the transition economies. We perform same analysis by using data sets from G-7 countries but do not notice any linkages between those variables. Based on the comparative empirical results, we discuss some policy implications and provide suggestions in the context of constitutional economics.
