This paper analyzes the influence of the shadow economy on corruption and vice versa. We hypothesize that corruption … that the shadow economy reduces corruption in high income countries, but increases corruption in low income countries. We … also find that stricter regulations increase both corruption and the shadow economy. …

Corporation (MCC) was successful in promoting better control of corruption. We employ a difference … corruption over time. -- foreign aid ; corruption ; Millennium Challenge Corporation ; MCC effect …