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Un modelo IS/LM con economía ilegal y lavado de dinero
[Modeling illegal economy and money laundering: an IS/LM framework]

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  • Slim, Sadri

Abstract

The purpose of this paper is to present an extended version of the IS/LM model, with illegal economy and money laundering in a closed economy, which allows an macroeconomic analysis of the effects of this presence on short-term equilibrium. Without disregarding the FATF´s money laundering typology, we propose to differentiate the money laundering activities by the degree of crime organization. Thus, in a closed economy, we suppose two money laundering channels, through consumption and investment, which are reflecting the reintegration of the illegal money by individual criminals and by the organized crime. It is shown that the multiplier effect of the illegal economic activities is always negative on formal GDP, while the effect on the interest rate depends on the structure of the considered economy.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 46304.

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Date of creation: 17 Apr 2013
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Handle: RePEc:pra:mprapa:46304

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Keywords: Money Laundering; ISLM Model; Multiplier effects; Informal Economy;

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  1. Poret, Sylvaine, 2002. "Paradoxical effects of law enforcement policies: the case of the illicit drug market," International Review of Law and Economics, Elsevier, Elsevier, vol. 22(4), pages 465-493, December.
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