On Estimating the Size of the Shadow Economy
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Gebhard Kirchgässner
Abstract
As long as it is employed cautiously enough, the model approach is a useful tool to estimate simultaneously the size and the development of the shadow economy in several countries. However, a second method is necessary to calibrate the model. The currency demand approach can lead to highly implausible results; the size of the shadow economy might be largely overestimated. An alternative is the survey method. For real tests of whether a variable has an impact, procedures are necessary that do not use the same variables as those used to construct the indicator. Thus, to make progress in analysing the shadow economy, the model approach has a role to play, but it has to be complemented by other methods employing different data. The currency demand approach cannot be used as long as it employs the same variables for its constructions.
© 2019 by Walter de Gruyter Berlin/Boston
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Articles in the same Issue
- When a Door Closes, a Window Opens? Long-Term Labor Market Effects of Involuntary Separations
- Candidates’ Education and Turnout: Evidence from Italyn Municipal Elections
- von Thünen: Capital, Production Functions, Marginal Productivity Wages, and the Natural Wage
- On the Incentive Effects of Sample Size in Monitoring Agents – A Theoretical and Experimental Analysis
- On Estimating the Size of the Shadow Economy
- Reply to Gebhard Kirchgässner
