The Relationship Between Illicit Coca Production and Formal Economic Activity in Peru
AbstractThis paper investigates the relationship between unrecorded economic activity associated with the production of illicit coca and formally recorded economic activity in Peru. It does so by attempting to construct new regional level estimates for coca production and by implementing recently developed panel time series methods that are robust to regional heterogeneity and unobserved regional inter-dependencies. The paper finds that on balance illicit coca production crowds out formal sector production at the regional level, regardless of whether unanticipated changes occur nationally or regionally. However, total output nevertheless increases, since formal sector production is crowded out less than one for one.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 11/182.
Date of creation: 01 Aug 2011
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-08-22 (All new papers)
- NEP-IUE-2011-08-22 (Informal & Underground Economics)
- NEP-LAM-2011-08-22 (Central & South America)
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