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Measuring Global Money Laundering: "The Walker Gravity Model"

Author

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  • Walker John

    (University of Wollongong, Australia Utrecht University School of Economics)

  • Unger Brigitte

    (University of Wollongong, Australia Utrecht University School of Economics)

Abstract

Measuring global money laundering, the proceeds of transnational crime that are pumped through the financial system worldwide, is still in its infancy. Methods such as case studies, proxy variables, or models for measuring the shadow economy all tend to under- or overestimate money laundering. The model presented here is a gravity model which makes it possible to estimate the flows of illicit funds from and to each jurisdiction in the world and worldwide. This Walker Model was first developed in 1994, and used and updated recently. We show that it belongs to the group of gravity models which have recently become popular in international trade theory. Using triangulation, we demonstrate that the original Walker Model estimates are compatible with recent findings on money laundering. Once the scale of money laundering is known, its macroeconomic effects and the impact of crime prevention, regulation and law enforcement effects on money laundering and transnational crime can also be measured.

Suggested Citation

  • Walker John & Unger Brigitte, 2009. "Measuring Global Money Laundering: "The Walker Gravity Model"," Review of Law & Economics, De Gruyter, vol. 5(2), pages 821-853, December.
  • Handle: RePEc:bpj:rlecon:v:5:y:2009:i:2:n:2
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    References listed on IDEAS

    as
    1. Anderson, David A, 1999. "The Aggregate Burden of Crime," Journal of Law and Economics, University of Chicago Press, vol. 42(2), pages 611-642, October.
    2. Buscaglia Edgardo, 2008. "The Paradox of Expected Punishment: Legal and Economic Factors Determining Success and Failure in the Fight against Organized Crime," Review of Law & Economics, De Gruyter, vol. 4(1), pages 290-317, October.
    3. Brigitte Unger, 2007. "The Scale and Impacts of Money Laundering," Books, Edward Elgar Publishing, number 12690.
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    Citations

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    Cited by:

    1. Joras Ferwerda & Mark Kattenberg & Han-Hsin Chang & Brigitte Unger & Loek Groot & Jacob A. Bikker, 2013. "Gravity models of trade-based money laundering," Applied Economics, Taylor & Francis Journals, vol. 45(22), pages 3170-3182, August.
    2. Gerhard Graf, 2011. "Some stylised facts about cash and black economies in Germany," European Journal of Law and Economics, Springer, vol. 32(1), pages 51-67, August.
    3. Schneider, Friedrich, 2010. "The (Hidden) Financial Flows of Terrorist and Organized Crime Organizations: A Literature Review and Some Preliminary Empirical Results," IZA Discussion Papers 4860, Institute for the Study of Labor (IZA).
    4. Unger Brigitte, 2009. "Money Laundering - A Newly Emerging Topic on the International Agenda," Review of Law & Economics, De Gruyter, vol. 5(2), pages 807-819, December.
    5. Raffaella Barone & Domenico Delle Side & Donato Masciandaro, 2017. "Drug Trafficking, Money Laundering And The Business Cycle: Does Secular Stagnation Include Crime?," BAFFI CAREFIN Working Papers 1747, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    6. Guerino Ardizzi & Carmelo Petraglia & Massimiliano Piacenza & Friedrich Schneider & Gilberto Turati, 2013. "Money Laundering as a Financial Sector Crime - A New Approach to Measurement, with an Application to Italy," CESifo Working Paper Series 4127, CESifo Group Munich.
    7. Schneider, Friedrich, 2017. "Restricting or Abolishing Cash: An Effective Instrument for Fighting the Shadow Economy, Crime and Terrorism?," International Cash Conference 2017 – War on Cash: Is there a Future for Cash? 162914, Deutsche Bundesbank.
    8. Friedrich Schneider, 2011. "The Financial Flows of the Transnational Crime: Some Preliminary Empirical Results," Economics of Security Working Paper Series 53, DIW Berlin, German Institute for Economic Research.
    9. Victor Ginsburgh & Shlomo Weber, 2018. "The Economics of Language," Working Papers ECARES 2018-18, ULB -- Universite Libre de Bruxelles.
    10. Raffaella Barone & Donato Masciandaro, 2011. "Organized crime, money laundering and legal economy: theory and simulations," European Journal of Law and Economics, Springer, vol. 32(1), pages 115-142, August.
    11. Brigitte Unger, 2013. "Introduction," Chapters,in: Research Handbook on Money Laundering, chapter 1, pages 3-16 Edward Elgar Publishing.
    12. Perez, M. Fabricio & Brada, Josef C. & Drabek, Zdenek, 2012. "Illicit money flows as motives for FDI," Journal of Comparative Economics, Elsevier, vol. 40(1), pages 108-126.
    13. Friedrich Schneider & Raul Caruso, 2011. "The (Hidden) Financial Flows of Terrorist and Transnational Crime Organizations: A Literature Review and Some Preliminary Empirical Results," Economics of Security Working Paper Series 52, DIW Berlin, German Institute for Economic Research.
    14. Pietro A. Bianchi & Antonio Marra & Donato Masciandaro & Nicola Pecchiari, 2017. "Is It Worth Having the Sopranos on Board? Corporate Governance Pollution and Organized Crime: The Case of Italy," BAFFI CAREFIN Working Papers 1759, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.

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