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Revised estimates of the Underground Economy: Implications of US Currency held abroad

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  • Feige, Edgar L.

Abstract

The paper reexamines the strengths and weakness of all direct and indirect methods of estimating the amount of US currency held abroad and concludes that between 25% -45% of US currency is held abroad. This result stands in sharp contrast to the widely cited estimates presented by Porter and Judson (1996) who claim that between 55% -70% of US currency is held abroad. The new estimates of currency held abroad are used to derive a domestic currency series which is then employed in a conventional currency ratio model to estimate the size and growth of the unreported economy in the US between 1973 and 1994.

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File URL: http://mpra.ub.uni-muenchen.de/13805/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 13805.

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Date of creation: 1997
Date of revision:
Handle: RePEc:pra:mprapa:13805

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Related research

Keywords: Underground Economy; Unreported Economy; Unrecorded Economy; Currency Abroad; Shadow Economy; Tax gap; Location of US Currency;

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References

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  1. Gregory D. Hess & David H. Small & Flint Brayton, 1993. "Nominal income targeting with the monetary base as instrument: an evaluation of McCallum's rule," Proceedings, Board of Governors of the Federal Reserve System (U.S.).
  2. Russell C. Krueger & Jiming Ha, 1995. "Measurement of Co-Circulation of Currencies," IMF Working Papers 95/34, International Monetary Fund.
  3. Philip Cagan, 1958. "The Demand for Currency Relative to Total Money Supply," NBER Books, National Bureau of Economic Research, Inc, number caga58-1, July.
  4. Feige,Edgar L. (ed.), 1989. "The Underground Economies," Cambridge Books, Cambridge University Press, number 9780521262309.
  5. Philip Cagan, 1958. "The Demand for Currency Relative to Total Money Supply," NBER Chapters, in: The Demand for Currency Relative to Total Money Supply, pages 1-37 National Bureau of Economic Research, Inc.
  6. Laurent, Robert D, 1974. "Currency in Circulation and the Real Value of Notes," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 6(2), pages 213-26, May.
  7. Phillip Cagan, 1958. "The Demand for Currency Relative to the Total Money Supply," Journal of Political Economy, University of Chicago Press, vol. 66, pages 303.
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Citations

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Cited by:
  1. Edgar Feige & James Dean, 2002. "Dollarization and Euroization in Transition Countries: Currency Substitution, Asset Substitution, Network Externalities and Irreversibility," International Finance 0205003, EconWPA.
  2. Calza Alessandro & Zaghini Andrea, 2011. "Welfare Costs of Inflation and the Circulation of U.S. Currency Abroad," The B.E. Journal of Macroeconomics, De Gruyter, vol. 11(1), pages 1-21, May.
  3. Friedrich Schneider & Dominik Enste, 1999. "Shadow Economies Around the World - Size, Causes, and Consequences," CESifo Working Paper Series 196, CESifo Group Munich.
  4. George M. Georgiou, 2007. "Measuring the Size of the Informal Economy: A Critical Review," Working Papers 2007, Central Bank of Cyprus.
  5. Feige, Edgar L., 2009. "New estimates of overseas U.S. currency holdings, the Underground economy and the "Tax Gap"," MPRA Paper 19564, University Library of Munich, Germany.
  6. Feige, Edgar L., 2012. "The myth of the “cashless society”: How much of America’s currency is overseas?," MPRA Paper 42169, University Library of Munich, Germany.
  7. Feige,E.L., 2003. "The dynamics of currency substitution, asset substitution and de facto dollarization and euroization in transition countries," Working papers 3, Wisconsin Madison - Social Systems.
  8. Enste, Dominik & Schneider, Friedrich, 1998. "Increasing Shadow Economies all over the World - Fiction or Reality?," IZA Discussion Papers 26, Institute for the Study of Labor (IZA).
  9. Adenutsi, Deodat E. & Yartey, Charles A., 2007. "Financial sector development and the macrodynamics of ‘de facto’ dollarisation in developing countries: the case of Ghana," MPRA Paper 29333, University Library of Munich, Germany.
  10. Feige, Edgar L., 2011. "New estimates of U.S. currency abroad, the domestic money supply and the unreported Economy," MPRA Paper 34778, University Library of Munich, Germany.
  11. Richard D. Porter & Gretchen C. Weinbach, 1998. "Currency ratios and U.S. underground economic activity," Finance and Economics Discussion Series 1998-41, Board of Governors of the Federal Reserve System (U.S.).
  12. Philippe Beaugrand, 2003. "Overshooting and Dollarization in the Democratic Republic of the Congo," IMF Working Papers 03/105, International Monetary Fund.
  13. Porter, Richard D. & Weinbach, Gretchen C., 1999. "Currency ratios and U.S. underground economic activity," Economics Letters, Elsevier, vol. 63(3), pages 355-361, June.

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