Inter-American Seminar on Economics: Informality, Corruption, and Institutions.

• Position: Conferences

The NBER and FEDESARROLLO co-sponsored this year's Inter-American Seminar on Economics (IASE) on "Informality, Corruption, and Institutions." The conference, which was held in Bogota, Colombia, on December 1 and 2, was organized by NBER Research Associate Sebastian Edwards of University of California, Los Angeles, and Mauricio Cardenas, FEDESARROLLO, Colombia. The following papers were discussed:

Alberto Alesina, Harvard University and NBER, and Guido Tabellini, IGIER, Bocconi, "Why is Fiscal Policy often Procyclical?

Comments: Leonardo Villar, Banco de la Republica, Colombia

Norman V. Loayza and Jamele Rigolini, World Bank, "Informality Trends and Cycles"

Comments: Marcela Melendez, InterAmerican Development Bank

Sebastian Edwards, "Capital Controls, Contagion, and Capital Flows"

Comments: Roberto Junguito, Fasecolda, Colombia

William F. Maloney and Edwin Goni, World Bank, and Mariano Bosch, London School of Economics, "The Determinants of Rising Informality in Brazil: Evidence from Gross Worker Flows"

Comments: Maria Laura Alzua, IERAL de Fundacion Mediterranea, Argentina

Hugo Maul, Universidad Francisco Marroquin, Guatemala, "From Penny Capitalism to Global Markets: The Case of the Guatemalan Informal Sector"

Comments: Pablo Acosta, CAE Venezuela

Pablo Fajnzylber and William F. Maloney, World Bank, and Gabriel V. Montes, University of Illinois, Champaign-Urbana, "Does Formality Improve Micro-Firm Performance? Quasi-Experimental Evidence from the Brazilian SIMPLES Program"

Comments: Maurice Kugler, Harvard University

Raquel Bernal, Universidad de los Andes, Colombia, and Mauricio Cardenas, "Informality in Colombia: The Case of Child Labor"

Comments: Stefania Scandizzo, CAF, Venezuela

Ernesto Schargrodsky, Universidad Torcuato Di Tella, and Sebastian Galiani, Washington University, St. Louis, "Property Rights of the Poor: Effects of Land Titling"

Comments: Daniel Mejia, Banco de la Republica, Colombia

Jennifer Hunt, McGill University and NBER, " Bribery in Health Care in Peru and Uganda"

Comments: Mauricio Olivera, FEDESARROLLO, Colombia

Eric V. Edmonds, Dartmouth College and NBER, and Salil Sharma, Dartmouth College, "Institutional Influences on Human Capital Accumulation: Micro Evidence from Children Vulnerable to Bondage"

Comments: Alejandro Gaviria, Universidad de los Andes, Colombia

Many countries, especially developing ones, follow procyclical fiscal polices; that is, spending goes up (taxes go down) in booms and spending goes down (taxes go up) in recessions. Alesina and Tabellini provide an explanation for this suboptimal fiscal policy based upon political distortions and incentives for a less-than-benevolent government to appropriate rents. Voters have incentives similar to the "starving the Leviathan" classic argument, and demand more public goods or fewer taxes to prevent governments from appropriating rents when the economy is doing well. They test this argument against more traditional explanations based purely on borrowing constraints, with a reasonable amount of success.

Loayza and Rigolini study the trends and cycles of informal employment. They first present a theoretical model in which the size of informal employment is...