nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2014‒11‒12
three papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Reform, Informal Sector and Extortion By Mandal, Biswajit; Marjit, Sugata; Beladi, Hamid
  2. The size and development of the shadow economy in Bangladesh: An empirical investigation By Siddiki, Jalal
  3. In name only: Are free trade zones assisting capitalism or criminals and crony capitalists? By Roger Bate

  1. By: Mandal, Biswajit; Marjit, Sugata; Beladi, Hamid
    Abstract: Informal economy involving unrecorded, unregistered, extra legal activities employs majority of the workforce in the developing world. Such extra legal existence of informal production is facilitated through extortion by agents of political forces in power. Also extortion activities themselves constitute an informal segment. Full scale general equilibrium consequences of such institutions are rarely discussed in the literature. We develop a well specified general equilibrium model to explore the possible consequences of reform. Economic reform may have an expansionary effect on the number of extortionists. Depending on capital mobility and factor intensity assumptions informal output and informal wage may increase.
    Keywords: International Trade; Extortion; General Equilibrium.
    JEL: D5 D73 F1
    Date: 2014
  2. By: Siddiki, Jalal (Kingston University London)
    Abstract: The paper estimates the size of the shadow economy in Bangladesh by applying the multiple indicator multiple cause model to time series data from 1975-2010. The estimated size of the shadow economy ranges from 13.47% in 1984 to 37% in 2010. Taxes are one of the key drivers while monetization reduces the size of the shadow economy in Bangladesh.
    Keywords: Shadow economy; MIMIC model; Bangladesh.
    JEL: H11 H26 O17
    Date: 2013–06–30
  3. By: Roger Bate (American Enterprise Institute)
    Abstract: Free trade zones possess many attributes of capitalist economies and can attract foreign companies, foreign investment in domestic companies, industrial production, and wealth generation. However, such zones are also troubling; they can produce several negative results including a strong mafia presence, massive counterfeit operations, tax evasion, money laundering, and even terror financing.
    Keywords: China, Hezbollah, Counterfeit pharmaceuticals, Free Trade zone
    JEL: F
    Date: 2013–10

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