IDEAS home Printed from https://ideas.repec.org/a/bla/etrans/v14y2006i4p707-718.html
   My bibliography  Save this article

Problems measuring the underground economy in transition1

Author

Listed:
  • Jan Hanousek
  • Filip Palda

Abstract

An easy and popular method for measuring the size of the underground economy is to use macro data such as money demand or electricity demand to infer what the legitimate economy needs, and then to attribute the remaining consumption to the underground economy. Such inferences rely on the stability of parameters of the money demand and electricity demand equations, or at very least on knowledge of how these parameters are changing. We argue that the pace of change of these parameters is too variable in transition economies for the above methods of estimating the size of the underground economy to be applicable. We make our point by using Czech Republic and other transition country data from the financial and electricity sectors.

Suggested Citation

  • Jan Hanousek & Filip Palda, 2006. "Problems measuring the underground economy in transition1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 14(4), pages 707-718, October.
    • Handle: RePEc:bla:etrans:v:14:y:2006:i:4:p:707-718
    DOI: 10.1111/j.1468-0351.2006.00268.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1468-0351.2006.00268.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1468-0351.2006.00268.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Fethi Ogunc & Gokhan Yilmaz, 2000. "Estimating The Underground Economy In Turkey," Discussion Papers 0004, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dóra Benedek & Orsolya Lelkes, 2011. "The Distributional Implications of Income Under‐Reporting in Hungary," Fiscal Studies, Institute for Fiscal Studies, vol. 32(4), pages 539-560, December.
    2. Luisanna Onnis & Patrizio Tirelli, 2010. "Challenging the popular wisdom. New estimates of the unobserved economy," Working Papers 184, University of Milano-Bicocca, Department of Economics, revised Apr 2010.
    3. Tomas Lichard & Jan Hanousek & Randall K. Filer, 2012. "Measuring the Shadow Economy: Endogenous Switching Regression with Unobserved Separation," Economics Working Paper Archive at Hunter College 438, Hunter College Department of Economics.
    4. Psychoyios, Dimitrios & Missiou, Olympia & Dergiades, Theologos, 2021. "Energy based estimation of the shadow economy: The role of governance quality," The Quarterly Review of Economics and Finance, Elsevier, vol. 80(C), pages 797-808.
    5. Byung‐Yeon Kim & Youngho Kang, 2009. "The informal economy and the growth of small enterprises in Russia1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 17(2), pages 351-376, April.
    6. Luisanna Onnis & Patrizio Tirelli, 2011. "Institutions, policies and economic development. What are the causes of the shadow economy?," Working Papers 206, University of Milano-Bicocca, Department of Economics, revised Mar 2011.
    7. Peter, Klara Sabirianova, 2009. "Income Tax Flattening: Does It Help to Reduce the Shadow Economy?," IZA Discussion Papers 4223, Institute of Labor Economics (IZA).
    8. Adriana AnaMaria Davidescu & Eduard Mihai Manta & Adina Teodora Stoica-Ungureanu & Magdalena Anton (Musat), 2022. "Could Religiosity and Religion Influence the Tax Morale of Individuals? An Empirical Analysis Based on Variable Selection Methods," Mathematics, MDPI, vol. 10(23), pages 1-32, November.
    9. Matsaganis, Manos & Flevotomou, Maria, 2010. "Distributional implications of tax evasion in Greece," LSE Research Online Documents on Economics 26074, London School of Economics and Political Science, LSE Library.
    10. Tomáš Lichard & Jan Hanousek & Randall K. Filer, 2021. "Hidden in plain sight: using household data to measure the shadow economy," Empirical Economics, Springer, vol. 60(3), pages 1449-1476, March.
    11. Bruno Skrinjaric & Vedran Recher & Jelena Budak, 2017. "Consumption in the Dark: Estimating Unrecorded Expenditures of Households in Croatia," Croatian Economic Survey, The Institute of Economics, Zagreb, vol. 19(2), pages 135-167, December.
    12. Matsaganis, Manos & Benedek, Dóra & Flevotomou, Maria & Lelkes, Orsolya & Mantovani, Daniela & Nienadowska, Sylwia, 2010. "Distributional implications of income tax evasion in Greece, Hungary and Italy," MPRA Paper 21465, University Library of Munich, Germany.
    13. Fredström, Ashkan & Peltonen, Juhana & Wincent, Joakim, 2021. "A country-level institutional perspective on entrepreneurship productivity: The effects of informal economy and regulation," Journal of Business Venturing, Elsevier, vol. 36(5).
    14. Jan Hanousek & Filip Palda, 2008. "Tax Evasion Dynamics in the Czech Republic: First Evidence of an Evasional Kuznets Curve," CERGE-EI Working Papers wp360, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    15. Manos Matsaganis & Maria Flevotomou, 2010. "Distributional Implications of Tax Evasion in Greece," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 31, Hellenic Observatory, LSE.
    16. Alexandre Couture Gagnon, 2018. "Filip Palda: In memoriam," Public Choice, Springer, vol. 174(3), pages 213-217, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Richard J. Hunter Jr. & Mehmet Kilic, 2013. "The Effects of the European Debt Crisis on the Economic Future of Turkey. A Country Study," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 3(1), pages 195-209, January.
    2. Nurhan Davutyan, 2008. "Estimating the size of Turkey's informal sector: an expenditure‐based approach," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 11(4), pages 261-271.
    3. Omodero Cordelia Onyinyechi, 2019. "The Financial and Economic Implications of Underground Economy: The Nigerian Perspective," Academic Journal of Interdisciplinary Studies, Sciendo, vol. 8(2), pages 155-167, July.
    4. Armagan Tuna Aktuna Gunes & Christophe Starzec & François Gardes, 2013. "A new estimation of the size of informal economy using monetary and full expenditures in a complete demand system," Documents de travail du Centre d'Economie de la Sorbonne 13053, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    5. Misbah Kiani & Adeel Ahmed & Khalid Zaman, 2015. "Combining qualitative and quantitative approaches for measuring underground economy of Pakistan," Quality & Quantity: International Journal of Methodology, Springer, vol. 49(1), pages 295-317, January.
    6. Karanfil, Fatih & Ozkaya, Ata, 2007. "Estimation of real GDP and unrecorded economy in Turkey based on environmental data," Energy Policy, Elsevier, vol. 35(10), pages 4902-4908, October.
    7. Vedran Sosic & Michael Faulend, 2002. "Dollarisation and the Underground Economy: Accidental Partners?," Occasional paper series 15, Institute of Public Finance.
    8. Jos� Brambila Macias & Guido Cazzavillan, 2008. "The Dynamics of Parallel Economies. Measuring the Informal Sector in M�xico," Working Papers 2008_42, Department of Economics, University of Venice "Ca' Foscari".
    9. Cordelia Onyinyechi Omodero, 2019. "The Financial and Economic Implications of Underground Economy: The Nigerian Perspective," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 8, July.
    10. Omodero Cordelia Onyinyechi, 2019. "The Consequences of Shadow Economy and Corruption on Tax Revenue Performance in Nigeria," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 29(3), pages 64-79, September.
    11. Vuslat Us, 2006. "Integrating the Informal Sector into the Formal Economy: Some Policy Implications," Sosyoekonomi Journal, Sosyoekonomi Society, issue 2006-1.
    12. Chiumya, Chiza, 2007. "The Parallel Economy in Malawi: Size, Effect on Tax Revenue and Policy Options," MPRA Paper 9860, University Library of Munich, Germany.
    13. Armagan Tuna Aktuna-Gunes & Christophe Starzec & François Gardes, 2014. "A New Estimation Of The Size Of Informal Economy Using Monetary And Full Expenditures In A Complete Demand System [Une évaluation de la taille de l'économie informelle par un système complet de dem," PSE-Ecole d'économie de Paris (Postprint) hal-01307146, HAL.
    14. Pinar Yesin, 2004. "Tax Collection Costs, Tax Evasion and Optimal Interest Rates," Working Papers 04.02, Swiss National Bank, Study Center Gerzensee.
    15. Ahumada, Hildegart & Alvaredo, Facundo & Canavese, Alfredo J., 2006. "The Demand for Currency Approach and the Size of the Shadow Economy: A Critical Assessment," Berkeley Olin Program in Law & Economics, Working Paper Series qt6zn9p98b, Berkeley Olin Program in Law & Economics.
    16. Armagan Tuna Aktuna-Gunes & Christophe Starzec & François Gardes, 2014. "A New Estimation Of The Size Of Informal Economy Using Monetary And Full Expenditures In A Complete Demand System [Une évaluation de la taille de l'économie informelle par un système complet de dem," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01307146, HAL.
    17. Armagan Tuna Aktuna-Gunes & Christophe Starzec & François Gardes, 2014. "A New Estimation Of The Size Of Informal Economy Using Monetary And Full Expenditures In A Complete Demand System [Une évaluation de la taille de l'économie informelle par un système complet de dem," Post-Print hal-01307146, HAL.
    18. Imamoglu, Hatice, 2017. "Estimating the roles of financial sector development and international trade openness in underground economies: Evidence from the European Union," Economics Discussion Papers 2017-50, Kiel Institute for the World Economy (IfW Kiel).
    19. Manamba EPAPHRA & Moga Tano JILENGA, 2017. "Currency Demand, the Subterranean Economy and Tax Evasion: The Case of Tanzania," Journal of Economic and Social Thought, KSP Journals, vol. 4(2), pages 187-211, June.
    20. Macias, Jose Brambila & Cazzavillan, Guido, 2009. "The dynamics of parallel economies. Measuring the informal sector in Mexico," Research in Economics, Elsevier, vol. 63(3), pages 189-199, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:etrans:v:14:y:2006:i:4:p:707-718. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/ebrdduk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.