Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/328610 
Year of Publication: 
2022
Citation: 
[Journal:] Economies [ISSN:] 2227-7099 [Volume:] 10 [Issue:] 12 [Article No.:] 310 [Year:] 2022 [Pages:] 1-33
Publisher: 
MDPI, Basel
Abstract: 
The present analysis assessed the effect of Aid-for-Trade (AfT) flows on the shadow economy using an unbalanced panel dataset of 106 countries over the period of 2002 to 2015. The empirical results obtained by means of the two-step system generalized method of moments showed that higher AfT flows were associated with a decrease in the size of the shadow economy, with less developed countries experiencing a greater negative effect of AfT flows on the shadow economy than relatively advanced countries among recipient countries of AfT flows. AfT interventions reduced the size of the shadow economy in countries that faced high trade costs as well as in those that experienced a depreciation in the real exchange rate. Finally, AfT interventions reduced the size of the shadow economy in countries that improved economic sophistication.
Subjects: 
Aid for Trade
real exchange rate
shadow economy
trade costs
JEL: 
F14
F35
O17
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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