Document Type

Article

Language

eng

Format of Original

16 p.

Publication Date

8-2006

Publisher

Elsevier

Source Publication

Journal of Development Economics

Source ISSN

0304-3878

Original Item ID

doi: 10.1016/j.jdeveco.2005.02.011; Shelves: HB1 .J55x

Abstract

Using the state level data from India, this paper investigates the size of the hidden economy in Indian states over the period 1974/75 to 1995/96. Our analysis has shown that after liberalization of the Indian economy in 1991/92, the growth in the size of the hidden economy has decreased on an average. Our results show that the growth in the size of the hidden economy is approximately 4% less in scheduled election years than in all other years. We also demonstrate that the growth is significantly lower in those states where the coalition government is in power. An increased growth of newspapers and the literacy rates translate to cleaner governance, e.g. to fewer amounts of shadow economy activities in the economy.

Comments

Accepted version. Journal of Development Economics, Volume 80, No. 2 (August 2006): pg. 428-443. DOI. © Elsevier 2006. Used with permission.

Sumana Chattopadhyay was affiliated with the University of Missouri at the time of publication.

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