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Estimating the underground economy by using MIMIC models: A response to T. Breusch´s critique

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Author Info
Roberto Dell’Anno () (Department of Economics and Statistics, University of Salerno, Italy)
Friedrich G. Schneider () (Department of Economics, Johannes Kepler University Linz, Austria)

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Abstract

Breusch (2005b) critically addresses an important and challenging question: Is it reliable to use the Multiple Indicators Multiple Causes model to estimate Shadow Economy? Breusch concludes that this approach is not suitable for the purpose. Breusch’s paper highlights the different procedures and hypotheses about the estimation of the size and development of the shadow economy in three papers: Giles and Tedds (2002a), Dell’Anno and Schneider (2003) and Bajada and Schneider (2005). In this paper, we will react and provide some answers to Breusch’s criticisms with special reference to the criticisms of the Dell’Anno and Schneider (2003) paper. According with us, the MIMIC model is still one of the best approaches to this purpose.

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Paper provided by Department of Economics, Johannes Kepler University Linz, Austria in its series Economics working papers with number 2006-07.

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Date of creation: Jul 2006
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Handle: RePEc:jku:econwp:2006_07

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Related research
Keywords: shadow economy; MIMIC model; structural modelling.;

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This paper has been announced in the following NEP Reports: Cited by:
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  1. Friedrich Schneider, 2006. "Shadow Economies and Corruption all over the World: What do we really Know?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  2. José Brambila Macias & Guido Cazzavillan, 2008. "Modelling the Informal Economy in Mexico. A Structural Equation Approach," Working Papers 2008_41, University of Venice "Ca' Foscari", Department of Economics. [Downloadable!]
    Other versions:
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