Illicit Activity and Money Laundering from an Economic Growth Perspective : A Model and an Application to Colombia
| Autor: | Villa, Edgar, Misas, Martha A., Loayza, Norman V. |
|---|---|
| Jazyk: | angličtina |
| Rok vydání: | 2016 |
| Předmět: |
REAL INCOME
RETURNS TO SCALE BANKING SYSTEM INVENTORY GENERAL EQUILIBRIUM ECONOMIC GROWTH EXPENDITURE FUNCTIONS GROSS DOMESTIC PRODUCT EXCHANGE RATES ASSET DEPRECIATION TECHNICAL ASSISTANCE DOMESTIC MARKET UNEMPLOYMENT INCOME MACROECONOMICS RECESSION PRODUCTIVITY PERFECT COMPETITION REAL INTEREST RATE PUBLIC INVESTMENTS DISPOSABLE INCOME STOCK INCENTIVES MACROECONOMIC MODEL BONDS TOTAL INVESTMENT INDICATOR VARIABLES EXTERNALITY NEGATIVE EXTERNALITY REAL COST AGGREGATE INCOME DUTCH DISEASE CONSTANT RETURNS TO SCALE BALANCE OF PAYMENTS WORLD MARKETS DEVELOPMENT ECONOMICS MARKETS DEVELOPMENT BUSINESS CYCLE TOTAL COSTS WAGES OPEN ECONOMY MONETARY INSTABILITY OPTIMIZATION WELFARE PRODUCTION LABOR MARKET SUPPLIES MONEY INCOME TAXES CONSUMPTION DEBT MARGINAL PRODUCTIVITY RISKS RECESSIONS EQUILIBRIUM RISK NEUTRAL PAYMENTS WEALTH CENTRAL BANK ECONOMICS LITERATURE DEMAND ECONOMETRIC ESTIMATES GRAVITY MODEL CONSUMPTION DECISIONS SURPLUS VARIABLES CONSUMPTION GOODS UTILITY FUNCTION MONEY SUPPLY MACROECONOMIC STABILITY BASE YEAR CAPITAL NATIONAL SAVINGS BANKRUPTCY DISTORTIONS LIBERALIZATION UTILITY VALUE EXPORTS STEADY STATE ECONOMIC CRISES AGGREGATE DEMAND GENERAL EQUILIBRIUM MODEL CAPITAL MARKETS ECONOMETRICS UNEMPLOYMENT RATE CAPITAL STOCK FOREIGN CAPITAL MONETARY SUPPLY CURRENCY TAXES CURRENT ACCOUNT ECONOMY LONG-RUN EQUILIBRIUM DEPRECIATION RATE IMPORTS CURRENT ACCOUNT SURPLUS OVERLAPPING GENERATIONS MODEL UNEMPLOYMENT RATES REAL GDP EXPECTATIONS FOREIGN INVESTMENT DISTORTION INVESTMENT LEVELS MAXIMUM LIKELIHOOD ESTIMATION INTEREST IMPERFECT COMPETITION RELATIVE PRICE INPUTS EXPENDITURE FUNCTION CAPITAL ACCUMULATION SAVINGS EXOGENOUS VARIABLES INTEREST RATE |
| Popis: | This paper contributes to the economic analysis of illicit activities and money laundering. First, it presents a theoretical model of long-run growth that explicitly considers illicit workers, activities, and income, alongside a licit private sector and a functioning government. Second, it generates estimates of the size of illicit income and provides simulated and econometric estimates of the volume of laundered assets in the Colombian economy. In the model, the licit sector operates in a perfectly competitive environment and produces a licit good through a standard neoclassical production function. The illicit sector operates in an imperfectly competitive environment and is composed of two different activities: The first activity produces an illicit good that nonetheless is valuable in the market (for example illicit drugs); the second does not add value to the economy but only redistributes wealth (for example robbery, kidnapping, and fraud). The paper provides a series of comparative statics exercises to assess the effects of changes in government efficiency, licit sector productivity, and illicit drug prices. From the model, the analysis derives a set of estimable macroeconometric equations to measure the size of laundered assets in the Colombian economy in the period 1985 to 2013. The paper assembles a data set whose key components are estimates of illicit income from drug trafficking and common crime. Illicit incomes increased drastically until 2001, reaching a peak of nearly 12 percent of gross domestic product and then decreasing to less than 2 percent by 2013. The decline overlaps not only in a period of high economic growth, but also after the implementation of Plan Colombia. The data set is used to estimate the volume of laundered assets in the economy by applying the Kalman filter for the estimation of unobserved dynamic variables onto the derived macroeconometric equations from the model. The findings show that the volume of laundered assets increased from about 8 percent of gross domestic product in the mid-1980s to a peak of 14 percent by 2002, and declined to 8 percent in 2013. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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