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A Re-Examination of the 'Underground Economy' in the United States; A Comment on Tanzi

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  • Edgar L. Feige

    (University of Wisconsin-Madison)

Abstract

This paper examines alternative specifications of a general currency ratio (GCR)model used to obtain macroeconomic estimates of the size and growth of the 'underground economy'. Tanzi's approach to estimating the underground economy is shown to be a variation of the GCR model. However both his conceptual specification and his empirical implementation of the model are shown to flawed, leading to significant underestimation of the size and growth of unreported income in the US economy. The paper appears in the International Monetary Fund Staff Papers, Vol. 33 No. 4 December, 1986

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Bibliographic Info

Paper provided by EconWPA in its series Macroeconomics with number 0501021.

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Date of creation: 18 Jan 2005
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Handle: RePEc:wpa:wuwpma:0501021

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Web page: http://128.118.178.162

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Keywords: Underground economy; unreported income; currency demand; tax evasion.;

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