International Disease Epidemics and the Shadow Economy

Adding to the emerging body of research related to the current coronavirus crisis, this paper studies the impact of disease epidemics on the worldwide prevalence of the shadow or the underground economy. The informal sector undermines compliance with government regulations and lowers tax collections. Our main hypothesis is that epidemics positively impacts the spread of the shadow economy. Using data on nearly 130 nations and nesting the empirical analysis in the broader literature on the drivers of the shadow sector, we find that both the incidence and the intensity of epidemics positively and significantly contribute to the spread of the underground sector. Numerically, a ten percent increase in the intensity of epidemics leads to an increase in the prevalence of the shadow economy by about 2.1 percent. These findings about the spillovers from epidemics have implications for economic policies in the current times of coronavirus. JEL-Codes: I150, K420

Does Gender Matter? Examining the Impact of Coach Gender on Team Success: Evidence from the NCAA Division I Basketball Tournament

We examine the impact of coach gender on the probability that NCAA Division I women’s basketball teams advance to the end-of-year NCAA tournament. Results of our full sample analysis show that coach gender has no significant impact on the likelihood of advancing, providing no evidence for ability as a potential explanation for the decline in women coaches. In the subsample analysis, while we find that men coaches have higher predicted probabilities of tournament appearances in non-Power Five conferences, women coaches are more successful in the elite Power Five conferences, where they have been losing the most ground in coaching positions

Does globalisation affect the shadow economy?

We investigate the impact of globalisation on the shadow economy using panel data for 119 countries. Our evidence suggests that globalisation matters in mitigating shadow development. More specifically, we find that political globalisation reduces the shadow economy, whereas economic and social globalisations have limited statistical support after controlling for important factors that affect the size of the shadow economy. Overall, these results are robust after accounting for an alternative measure of the shadow economy, outliers, endogeneity and alternative model specifications

Globalization and informal entrepreneurship: A cross-country analysis

This paper provides a comprehensive empirical analysis on the relationship between globalization and informal entrepreneurship. The impact of globalization on informal entrepreneurship was analyzed using cross-country data. Using ordinary least squares and instrumental variables techniques, the results showed that globalization reduces informal entrepreneurship. This finding was robust to various sensitivity analyses including an alternate measure of globalization, an alternate measure of informal entrepreneurship, controlling for additional covariates, accounting for endogeneity of globalization, correcting for outliers, and considering nonlinearities. Furthermore, employing quantile regression analysis, the results suggested that globalization was most effective when informal entrepreneurship was most prevalent. Consequently, nations would benefit with regard to less underground entrepreneurship from policies that promote globalization through such things as removing barriers to trade, improving the transmission of information and promoting involvement in international organizations

Driven underground by (mis)trust?

© 2019, © 2019 Informa UK Limited, trading as Taylor & Francis Group. Studies have shown that economic and institutional variables are among the causes of underground activities. However, the effect of cultural variables such as trust on informality and, in particular, informal entrepreneurship, have been less explored. Using unique cross-national data, we study the influence of generalized trust on underground entrepreneurship. We find that nations with higher trust are associated with less informal entrepreneurship

What drives entrepreneurs underground? The role of tax morale

Using novel cross-country data, we examine whether and to what extent tax morale impacts informal entrepreneurship. Employing instrumental variables strategy, we find that countries with higher tax morale enjoy lower informal entrepreneurship

Do disease epidemics stimulate or repress entrepreneurial activity?

This study addresses a unique angle by examining an under looked determinant of entrepreneurship related to disease epidemics. In times of natural disasters, such as disease epidemics, new demands emerge that might promote entrepreneurship. Using data on a large cross section of countries, we empirically test whether and to what extent the incidence and severity of disease epidemics affect the prevalence of entrepreneurship. The results show that both the occurrence and severity of epidemics spur entrepreneurial activity. These results highlight a potentially important role served by entrepreneurs in responding to biological disasters. Our findings withstand a series of robustness checks

The Case for Independence: Does Central Bank Independence Curb the Spread of the Underground Economy?

This paper considers an alternate dimension of government institutions associated with the separation of powers between government and its central bank. A more independent central bank is consistent with greater institutional quality and constraints on government. We propose that central bank independence influences the prevalence of the shadow, or underground, economy. Using cross-country panel data for over 100 nations over the period 1991 to 2012, the results from instrumental variables techniques show that central bank independence curbs underground economic activity. Furthermore, considering different dimensions of independence, we find that independence related to central bank CEO, policy formation, and central bank lending are effective at checking the shadow sector. Overall, these findings are robust to a different measure of the underground economy, correcting for the potential influence of outliers, controlling for the impact of additional factors, accounting for heterogeneity related to the level of development, and considering the heterogeneity related to the prevalence of the shadow sector. The main implication of the results is that nations seeking to reduce the prevalence of the underground economy would benefit from policies that promote central bank independence

The political economy of energy regulation in OECD countries

This paper examines the effect of government ideology, political factors and globalization on energy regulation in electricity and gas industries using the bias-corrected least square dummy variable model in a panel of 23 OECD countries over the period of 1975-2007. We find that left-wing governments promote regulation in gas and electricity sectors. Also, less politically fragmented institutions contribute to deregulation of gas and electricity industries. Long tenures of incumbent government have limited impact on regulation in electricity sector, while it is associated with an increase in regulation of gas sector. Further, we find that higher political constraints and more globalized countries lead to deregulation in electricity and gas sectors. We discover that economic and social integration are the forces that promote deregulation in the gas industry, whereas political integration advance deregulation in the electricity industry. We emphasize that political economy factors are important determinants of energy regulation.Political economy Government ideology Globalization Energy regulation

Using the Fed Challenge to Enrich the Teaching of a Money and Banking Class

We describe the Fed Challenge Project, an experiential learning project for a Money and Banking course. In this project, modeled after the College Fed Challenge Competition, student teams present on the current state of the economy and create and defend monetary policy recommendations. The project gives students an opportunity to enhance their knowledge of monetary policy and develop important economic skills including data analysis and visualization, critical thinking, research, communication, and collaboration. Three elements of the project—relevancy of content, a combination of individual and collaborative work, and the inclusion of common and creative aspects—combine to enhance learning objectives