Although a common institutional arrangement, self-regulation as an alternative to direct government regulation has received relatively little attention from economists. This paper uses a framework inspired by property rights theory to analyze the allocation of regulatory authority. In a model of...

Across 69 countries, higher tax rates are associated with less unofficial activity as a percent of GDP but corruption is associated with more unofficial activity. Entrepreneurs go underground not to avoid official taxes but to reduce the burden of bureaucracy and corruption. Dodging the Grabbing...

In this sample of 49 Latin American, OECD, and transition economies, it is the ineffective and discretionary administration of tax and regulatory regimes--not higher tax rates alone--as well as corruption, that increases the size of the unofficial economy. And countries with a larger unofficial...

Elected politicians can choose to decide themselves or to delegate competence. Delegation can occur in the constitutional stage, but is most common in the post-constitutional stage. Furthermore, domestic delegation can be distinguished from international delegation. The authors propose to...

In a decade of transition, fear of a leviathan state is giving way to increased focus on oligarchs who "capture the state." In the capture economy, the policy and legal environment is shaped to the captor firm`s huge advantage, at the expense of the rest of the enterprise sector. This has major...

We review key issues in worldwide governance and present the latest findings related to empirical measurement in this field. We focus on key governance components, such as rule of law, voice and accountability, corruption control, and state capture by region and for selected countries. The...

This paper develops a proxy measure of the inequality of influence on the basis of survey evidence from 2002 Business Environment and Enterprise Performance Survey (BEEPS) conducted among 6,500 firms in 27 transition countries. We refer to the resulting inequality as crony bias in the political...

Based on the Business Environment and Enterprise Performance Survey (BEEPS) of firms in transition countries, which unbundles corruption to measure different types of corrupt transactions and provide detailed information on the characteristics and performance of firms, we find that: i)...

Finance has become more a problem than a solution to what the world most wants: socially inclusive economic growth. It has become a source of crises that threaten the development of the real economy. It has escaped accountability to democratic institutions and often helped, instead, to influence...

Robert Dahl asked, How Democratic is the United States Constitution? (2001). To address this question, Dahl embraces majoritarian democracy as his normative standard. Because the framers designed the U.S. Constitution with a wide array of constraints on majorities, Dahl’s answer is, not very....