Regulatory discretion and the unofficial economy: A redux

Mazhar, Ummad (2012): Regulatory discretion and the unofficial economy: A redux.

Abstract

This paper replicates the Johnson et al.’s (1998) empirical analysis of the affects of regulatory discretion on the unofficial economy. The narrow replication uses the data set of the original study which comprises of 49 countries for the year 1997. The wide replication is performed in two ways. Firstly, I investigate the original authors’ results using a larger data set of 162 countries and for a period from 1999 to 2007. Secondly, I use Arellano and Bond estimator to investigate the dynamics and causal effects. In both types of replications the results are similar to those in the original study. However, the estimates using Arellano and Bond estimator exhibit autocorrelation of order greater than 1 in the error term and are unable to pass the overidentifying restrictions test.

• Item Type: MPRA Paper
• Language: English
• Keywords: Unofficial or Shadow economy, Corruption, Replication, Regulation, Arellano and Bond estimator, Panel Data
• Subjects: K - Law and Economics > K2 - Regulation and Business Law > K20 - General; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O17 - Formal and Informal Sectors ; Shadow Economy ; Institutional Arrangements; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C23 - Panel Data Models ; Spatio-temporal Models; L - Industrial Organization > L5 - Regulation and Industrial Policy > L50 - General; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C33 - Panel Data Models ; Spatio-temporal Models

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