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The purpose of this paper is to show that states where corruption is greater also have higher levels of inflation.

Using a sample of all US states through the period 1992-2007 and various factors common across states that could impact the level of corruption or inflation, multiple regression techniques are used to determine corruption impact to inflation.

The study finds that corruption contributes, along with aid transfer, positively to inflation in the US states. The results are robust even after scaling the corruption variable to different determinants.

While there is some evidence on the relationship between corruption and inflation in cross-country dataset, there is no such evidence on it within country dataset. This paper, however, provides evidence on the relationship between corruption and inflation using state-level data of the US states.

Governments may finance its expenditures through multiple resources; however, seigniorage and borrowing are commonly used. The authors think that in the presence of corruption, the use of public finance may result in inflationary effect that leads to higher level of inflation, which in turn affects the whole economy.

This paper investigates if the variation in corruption levels jointly with public finance means, seigniorage and borrowing, accounts for the variation in the level of inflation. This paper uses panel data of 72 countries through the period 1995-2011.

The author find that corruption jointly with public finance means, seigniorage and borrowing, increase the level of inflation. This finding can address the misuse of these public finance means where corruption is prevalent.

This paper captures the joint effect of corruption with two different means of public finance, seigniorage and borrowing, on the level of inflation within 72 countries through 1995-2011.