Article (Scientific journals)
Hide and seek: IMF intervention and the shadow economy
Chletsos, Michael; Sintos, Andreas
2021In Structural Change and Economic Dynamics
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Keywords :
Shadow economy; IMF programs; Conditionality; Structural adjustment; World sample
Abstract :
[en] By explicating the mechanisms through which International Monetary Fund (IMF) programs operate, this study investigates the effect of IMF intervention on the shadow economy. Using a sample of 141 countries from 1991 to 2014, we examine the impact of both IMF participation and conditionality on the informal economy. Our analyses address sources of endogeneity related to, first, the IMF participation decision and, second, the conditions included within the program. The empirical findings suggest that both IMF program participation and conditionality increase the size of the shadow economy. Disaggregating IMF conditions into structural and quantitative shows that only structural conditions are significantly related to a larger shadow economy both in the short- and long-term. Financial development can reduce the size of the shadow economy, yet it cannot reverse the detrimental effect of IMF conditions. Our initial results are found to be robust across alternative empirical specifications.
Disciplines :
Business & economic sciences: Multidisciplinary, general & others
Quantitative methods in economics & management
Macroeconomics & monetary economics
Economic systems & public economics
Author, co-author :
Chletsos, Michael ;  University of Piraeus > Department of Economics
Sintos, Andreas   ;  University of Ioannina > Department of Economics
 These authors have contributed equally to this work.
External co-authors :
Language :
Title :
Hide and seek: IMF intervention and the shadow economy
Publication date :
December 2021
Journal title :
Structural Change and Economic Dynamics
Publisher :
Elsevier, Netherlands
Peer reviewed :
Peer Reviewed verified by ORBi
Available on ORBilu :
since 15 November 2022


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