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Global corruption and the shadow economy: spatial aspects

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  • Rajeev Goel

  • James Saunoris

Abstract

Using a large sample of nations, this paper examines the relation between corruption and the shadow economy, focusing especially on geographic spillovers. The results point to complementarity between corruption and the shadow economy. We find evidence of own contagion across nations in both corruption and shadow economy activity, while cross-contagion mostly points to substitution between own shadow economy (corruption) and neighboring corruption (shadow economy). These findings are fairly robust across different estimation techniques and measures of the shadow economy. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Rajeev Goel & James Saunoris, 2014. "Global corruption and the shadow economy: spatial aspects," Public Choice, Springer, vol. 161(1), pages 119-139, October.
    • Handle: RePEc:kap:pubcho:v:161:y:2014:i:1:p:119-139
    DOI: 10.1007/s11127-013-0135-1
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    JEL classification:

    • K49 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Other
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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