Pollution, Shadow Economy and Corruption: Theory and Evidence
By Amit K. Biswas, Mohammad Reza Farzanegan, Marcel Thum. Social Science Research Network, 2012
353 citations recorded by the source corpus.
We study how the shadow economy affects pollution and how this effect depends on corruption levels in public administration. Production in the shadow economy allows firms to avoid environmental regulation policies; a large informal sector may be accompanied by higher pollution levels. Our theoretical model predicts that controlling the levels of corruption can limit the effect of the shadow economy on pollution. We use panel data covering the period from 1999–2005 from more than 100 countries to test this theoretical prediction. Our estimates confirm that the relationship between the shadow economy and the levels of pollution are dependent on the levels of corruption. Our results hold when we control for the effects of other determinants of pollution, time varying common shocks, country-fixed effects and various additional covariates.
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/15b35ccdd0f9b0b5d403ab78933ebdc83f8c4cb3
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In Economics and Econometrics
- Muhammad Shahbaz
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Citations in the corpus
- Time-Varying Analysis of CO2 Emissions, Energy Consumption, and Economic Growth Nexus: Statistical Experience in Next 11 Countries (2016, background): “In doing this, other potential variables such as financial markets (Dogan and Turkrkul, 2016), trade reforms (Chang, 2015), energy mix (El Anshasy and Katsaiti, 2014), financial instability (Shahbaz, 2013), political stability (Galinato and Galinato, 2012), institutional quality (Tamazian and Rao, 2”
- Does the quality of institutions modify the economic growth-carbon dioxide emissions nexus? Evidence from a group of emerging and developing countries (2020, background): “Biswas, Farzanegan, and Thum (2012) analysed a panel of more than 100 countries between 1999 and 2005 and found the impact of the shadow economy on CO2 emissions to be dependent on corruption level, as it was less destructive for lower levels of corruption.”