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Analysis of the shadow economy in the Spanish regions

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  • González-Fernández, Marcos
  • González-Velasco, Carmen

Abstract

The aim of this paper is to analyze the shadow economy in the Spanish Autonomous Communities. In so doing, we employ the Currency Demand Approach to analyze the 1987–2010 period. The results show that the size of the shadow economy ranges from 18% to 30% of regional GDP and an approximate mean value of 25% for the entire territory. The Personal Income Tax has the greatest impact on the shadow economy. By region, Andalucía and the Islas Canarias have the highest values for the shadow economy, whereas Madrid presents the lowest value. We extract some implications for the public authorities.

Suggested Citation

  • González-Fernández, Marcos & González-Velasco, Carmen, 2015. "Analysis of the shadow economy in the Spanish regions," Journal of Policy Modeling, Elsevier, vol. 37(6), pages 1049-1064.
    • Handle: RePEc:eee:jpolmo:v:37:y:2015:i:6:p:1049-1064
    DOI: 10.1016/j.jpolmod.2015.09.006
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    References listed on IDEAS

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    Cited by:

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    More about this item

    Keywords

    Shadow economy; Currency Demand Approach; Black economy; Hidden economy; Black market;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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