Total factor productivity (TFP) falls markedly during financial crises, as we document with recent evidence from Mexico and Asia. These falls are unusual in magnitude and present a difficult challenge for the standard small open economy neoclassical model. We show in the case of Mexico's 1994-95...

This study documents four key facts about informal economic activities: (1) the size of the informal sector varies greatly across nations; (2) this size is strongly correlated with economic development, the tax burden, and the rule of law; (3) the informal sector emphasizes small-scale,...