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...

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...

Six new aggregate measures capturing various dimensions of governance provide new evidence of a strong causal relationship from better governance to better development outcomes. In a cross-section of more than 150 countries, Kaufmann, Kraay, and Zoido-Lobaton provide new empirical evidence of a...

In recent years, the growing interest of academics and policymakers in governance has been reflected in the proliferation cross-country indices measuring various aspects of governance. In this paper we explain how a simple variant of an unobserved components model can be used to combine the...