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The shadow economy in Colombia: size and effects on economic growth

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Abstract

Using the currency demand approach size and development of the Colombian shadow economy are estimated over the period from 1976 to 2002. In the 70s the size fluctuated around 20% of official GDP and rose to 50% in the 90s. The most important factors driving the shadow economy are unemployment and taxation. Analyzing the interaction between shadow and official economy, the shadow economy has a positive effect on the official one. Average growth rate of real per capita GDP is 1.11% between 1976 and 2002 and the shadow economy "explains" on average between 0.09 and 0.27 of this growth.

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Paper provided by Department of Economics, Johannes Kepler University Linz, Austria in its series Economics working papers with number 2007-03.

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Date of creation: Jan 2007
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Handle: RePEc:jku:econwp:2007_03

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Keywords: Colombian shadow economy; currency demand method; taxation; unemployment; interaction between the shadow and official economy;

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Cited by:
  1. HALICIOGLU, Ferda & Dell’Anno, Roberto, 2009. "An ARDL model of unrecorded and recorded economies in Turkey," MPRA Paper 24982, University Library of Munich, Germany.
  2. José Brambila Macias & Guido Cazzavillan, 2008. "Modelling the Informal Economy in Mexico. A Structural Equation Approach," Working Papers 2008_41, Department of Economics, University of Venice "Ca' Foscari".

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