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Shadow economy, corruption and public debt in Spain

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  • González-Fernández, Marcos
  • González-Velasco, Carmen

Abstract

The aim of this paper is to study the relationship between the shadow economy and corruption as determinants of public debt in the Spanish Autonomous Communities. In addition, we construct a Corruption Perception Index for those regions. Our data constitute panel data for the period 2000–2012. The results show that the volume of the shadow economy has a significant and positive impact on regional public debt. Corruption also shows a direct and significant relationship with public debt in the Autonomous Communities, although its impact is lower than that of the shadow economy. We extract some implications for the public authorities.

Suggested Citation

  • González-Fernández, Marcos & González-Velasco, Carmen, 2014. "Shadow economy, corruption and public debt in Spain," Journal of Policy Modeling, Elsevier, vol. 36(6), pages 1101-1117.
    • Handle: RePEc:eee:jpolmo:v:36:y:2014:i:6:p:1101-1117
    DOI: 10.1016/j.jpolmod.2014.10.001
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    More about this item

    Keywords

    Spain; Shadow economy; Corruption; Public debt; Sovereign debt;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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