Informality and Macroeconomic Volatility : Do Credit Constraints Matter?

ABSTRACT: Purpose – The purpose of this paper is to study the implications of borrowing constraints characterizing the informal sector for macroeconomic volatility. Design/methodology/approach – To this end, the author develops a simple dynamic stochastic general equilibrium model wherein registered activity not only is the basis to determine tax liabilities, but also serves as collateral for securing debts. Such a framework allows for computational experiments to analyze the effect of informality on aggregate fluctuations. Findings – The experiments show that the credit-constrained informal sector does exert a significant influence on the cyclical volatility of consumption and investment. Originality/value – There are not many studies addressing the implications of informal economic activities for macroeconomic fluctuations. This paper contributes to the literature by developing a theoretical model showing that credit constraints characterizing these activities might play a non-negligible role in explaining the cyclical volatility of some important aggregates.

• Autores: Granda Carvajal, Catalina
• Tipo de recurso: Article of journal
• Fecha de publicación: 2015
• Institución: Universidad de Antioquia
• Repositorio: Repositorio UdeA
• Idioma: eng
• OAI Identifier: oai:bibliotecadigital.udea.edu.co:10495/31870
• Acceso en línea: https://hdl.handle.net/10495/31870
• Palabra clave: Economía informal; Informal sector (Economics); Evasión de impuestos; Tax evasion; Credit constraints; Volatilidad (Economía)
• Rights: openAccess
• License: http://creativecommons.org/licenses/by-nc-nd/2.5/co/