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A Fuzzy Model To Estimate Romanian Underground Economy


  • Corina Maria ENE


  • Natalita HURDUC

    () (Hyperion University, Bucharest)


I propose here a model based on fuzzy logic in order to “quantify” Romanian underground economy. This approach starts from MIMIC model variables used by many authors in estimating underground economy in all over the world. I also assumed there can be establish a positive relation between a number of causal variables and underground economy. The model uses a set of variables whose choice is based on both economic theory and empirical observations. These variables determinate underground activities. The choice of variables can be considered subjective and the input variables set can be modified depending on the availability of data need. However, it should be noted that each of these variables have a lesser or greater contribution to underground activities development. Fuzzy logic language permits us to formulate rules such as “if the taxation rate is high, then the underground economy is large”. Using statistical series it can be establish a basic “normal” value for a given period against which all the variables magnitude can be calculated. The “normal” value for each series and each year is actually an average of previous time values. Many rules can be formulated, but they depend on number and values of variables considered.

Suggested Citation

  • Corina Maria ENE & Natalita HURDUC, 2010. "A Fuzzy Model To Estimate Romanian Underground Economy," Internal Auditing and Risk Management, Athenaeum University of Bucharest, vol. 2(18), pages 29-38, June.
  • Handle: RePEc:ath:journl:tome:18:y:2010(ii):i:2(18):p:29-38

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    Cited by:

    1. Sunanta, Owat & Viertl, Reinhard, 2016. "Fuzzy models in regional statistics," MPRA Paper 74501, University Library of Munich, Germany.

    More about this item


    fuzzy logic; linguistic variables; fuzzy model; underground economy; fiscal policy; underground economy fuzzy modelling; taxation rate; informal economic activities.;

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements


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