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Measuring Money Laundering Using ‘The Walkergravity Model‘


  • Corina -Maria Ene

    (Hyperion University from Bucharest Romania)


Addressing money laundering in terms of measurement possibilities of its dynamicsand size is a relatively recent concern. The hidden nature of this phenomenon (money launderingcan‘t be directly observed) make it impossible to obtain a comprehensive estimate of its size andgrowth rate. This situation has been widely discussed in economic literature, which has exposeda number of illegal economic transactions measurement methods. Unfortunately, many casestudies, econometric variables, or some other techniques used to measure shadow economy aretending to underestimate or overestimate money laundering. Moreover, estimating the size andvolume of financial resources generated by organized crime is an extremely difficult task mainlydue to lack of appropriate data. Therefore, all existing estimates contain considerable errors andthey are only preliminary scientific estimates. Since the official statistics are not able to capturethe dynamics of illicit financial flows, the researchers have developed a number of estimationmethods. These include "hot money" method, World Bank residual method, the model based oninternational market prices, the Walker Gravity model, and many similar. The model presented inthis paper is the gravity model that makes possible to estimate the illicit funds flow from somejurisdictions to others. Developed in 1994 the method is permanently updating. We try to provethat Walker Model estimates are compatible with nowadays findings on money laundering. Onceit knows the money laundering level, one can quantify its economic effect, the impact of moneylaundering prevention rules, and transnational crimes.

Suggested Citation

  • Corina -Maria Ene, 2014. "Measuring Money Laundering Using ‘The Walkergravity Model‘," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 2(16), pages 1-13.
  • Handle: RePEc:alu:journl:v:2:y:2014:i:16:p:13

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    money laundering; Walker Gravity model; illegal transactions; black market; organized crime;

    JEL classification:

    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements


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