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Corruption and the shadow economy: One‐way or two‐way street?

Author

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  • Aziz N. Berdiev
  • Rajeev K. Goel
  • James W. Saunoris

Abstract

This paper attempts to bring some resolution to the relation between corruption and the shadow economy. While previous research focuses on the static relationship between the two, we account for dynamics using a panel vector autoregression model and consider influences from the official economy and institutional quality. Using cross‐national panel data for 108 countries over the period 1984–2006, results show a bidirectional relationship with initial complementarity, and substitution over time. Thus, the nature of the two‐way street is shown to change over time and our consideration of dynamics reveals the complementarity–substitution switch.

Suggested Citation

  • Aziz N. Berdiev & Rajeev K. Goel & James W. Saunoris, 2018. "Corruption and the shadow economy: One‐way or two‐way street?," The World Economy, Wiley Blackwell, vol. 41(11), pages 3221-3241, November.
    • Handle: RePEc:bla:worlde:v:41:y:2018:i:11:p:3221-3241
    DOI: 10.1111/twec.12661
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    Citations

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    Cited by:

    1. Aziz N. Berdiev & James W. Saunoris, 2019. "On the Relationship Between Income Inequality and the Shadow Economy," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 45(2), pages 224-249, April.
    2. Dagmara Nikulin & Ewa Lechman, 2021. "Shadow Economy in Poland: Results of the Survey," SpringerBriefs in Economics, in: Shadow Economy in Poland, chapter 0, pages 49-65, Springer.
    3. Goel, Rajeev K. & Nelson, Michael A., 2021. "Capacity utilization in emerging economy firms: Some new insights related to the role of infrastructure and institutions," The Quarterly Review of Economics and Finance, Elsevier, vol. 79(C), pages 97-106.
    4. Ha, Le Thanh & Dung, Hoang Phuong & Thanh, To Trung, 2021. "Economic complexity and shadow economy: A multi-dimensional analysis," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 408-422.
    5. Canh, Nguyen Phuc & Thanh, Su Dinh, 2020. "Financial development and the shadow economy: A multi-dimensional analysis," Economic Analysis and Policy, Elsevier, vol. 67(C), pages 37-54.
    6. Mara, Eugenia Ramona, 2021. "Drivers of the shadow economy in European Union welfare states: A panel data analysis," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 309-325.
    7. Solomon Gyamfi & Yee Yee Sein, 2021. "Determinants of Sustainable Open Innovations—A Firm-Level Capacity Analysis," Sustainability, MDPI, vol. 13(16), pages 1-17, August.
    8. Aziz N. Berdiev & James W. Saunoris, 2019. "Globalization and Informal Entrepreneurship: A Cross-Country Analysis," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 47(1), pages 65-80, March.
    9. Aziz N. Berdiev & James W. Saunoris, 2020. "Cross‐Country Evidence Of Corruption Spillovers To Formal And Informal Entrepreneurship," Contemporary Economic Policy, Western Economic Association International, vol. 38(1), pages 48-66, January.

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