The Relationship Between Illicit Coca Production and Formal Economic Activity in Peru

By Peter L. Pedroni, Concha Verdugo Yepes

August 1, 2011

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Peter L. Pedroni, and Concha Verdugo Yepes. The Relationship Between Illicit Coca Production and Formal Economic Activity in Peru, (USA: International Monetary Fund, 2011) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper investigates the relationship between unrecorded economic activity associated with the production of illicit coca and formally recorded economic activity in Peru. It does so by attempting to construct new regional level estimates for coca production and by implementing recently developed panel time series methods that are robust to regional heterogeneity and unobserved regional inter-dependencies. The paper finds that on balance illicit coca production crowds out formal sector production at the regional level, regardless of whether unanticipated changes occur nationally or regionally. However, total output nevertheless increases, since formal sector production is crowded out less than one for one.

Subject: Consumer price indexes, Consumption, Expenditure, Government debt management, Legal support in revenue administration, National accounts, Prices, Public financial management (PFM), Public investment spending, Revenue administration

Keywords: Asia and Pacific, Coca derivatives production, Coca leaf production estimate, Coca paste production, Coca production, Cocaine production, Consumer price indexes, Consumption, Drugs, Economic impact, Europe, Global, Government debt management, Latin America, Legal support in revenue administration, Peru, Production value, Public investment spending, Regional economics, WP

Publication Details

Pages:

51
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2011/182
Stock No:

WPIEA2011182
ISBN:

9781462310289
ISSN:

1018-5941

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