The author presents the view that informal economies arise when governments impose excessive taxes and regulations that they are unable to enforce. The author studies the determinants and effects of the informal sector using an endogenous growth model whose production technology depends...

Large informal sectors are an important characteristic of developing countries. The authors build a dynamic model in which the informal sector exists when overregulation (high tax rates and high cost for entering the formal sector) is coupled with an inefficient and corrupt system of compliance...

Arguably, the most important public policy initiative underway today in the Dominican Republic is the reform of its social security programs. The reform is taking place in the context of an economic crisis that will make a complex implementation process even more difficult in the first few...

The explosion of informal entrepreneurial activity during Mongolia's transition to a market economy represents one of the most visible signs of change in this expansive but sparsely populated Asian country. To deepen our understanding of Mongolia's informal sector during the transition, the...

The remarkable performance of the Irish economy in recent years has attracted much attention. Within a 10-year period the economy went from an 18 percent unemployment rate to nearly full employment, while the ratio of debt to GDP fell from 120 percent to less than 50 percent. Inevitably, this...

This paper analyzes the enormous obstacles that the Democratic Republic of the Congo faces in forming a stable, development-oriented state. No government could design, implement, and finance a development program for the country without coordinated analytical and financial support from the...

Policy recommendations to reduce the growth of public spending are haunted by the inevitability of two factors. First Wagner's law, the hypothesis that with economic development an increasing share of GDP is devoted to public spending, and secondly, Baumol's effect, that as economies develop,...

Significant changes in public investment patterns - in both the sectoral uses of funds, and their geographic distribution - emerged after Bolivia devolved substantial resources from central agencies, to municipalities in 1994. By far the most important determinant of these changes are objective...

Despite a dramatic shift away from subsidies in the early years of transition, the countries of Central Europe still show signs of unsuccessful fiscal adjustment, insufficient deficit reduction, and loose spending policy. High social transfers and low efficiency of government spending remain two...

The authors review experiences with fiscal federalism in industrial countries and present a framework for a reform of fiscal systems in developing and transition economies. They indicate how the benefits of decentralized decisionmaking in a federal system can be achieved in a manner consistent...