Endogenous quality turnover, macroeconomic dynamics and the informal economy

To what extent do changes in the size of the informal sector affect changes in the quality of goods consumed in developing countries? It is well known that a poor assessment of the quantity and quality of goods consumed by households could lead economic models to underestimate the fluctuations of most macroeconomic variables. However, in developing countries, nearly 40% of economic activity is informal and is therefore hidden from the public authorities in order to avoid taxes and compliance (Schneider et al., 2010). This hidden production gives very little information on the quality as well as the number of varieties of goods consumed by households. We therefore propose in this research project to examine the role of the informal sector in the volume and quality of demand made by households. Our results will gain insight into the fluctuations of economic variables in order to recommend effective stabilization policies.

Faculty Supervisor:

Jonathan Goyette

Student:

Partner:

Waseda University

Discipline:

Sociology

Sector:

Education

University:

Université de Sherbrooke

Program: