A Thematic Discussion on the Role of Descriptive Analysis in theStudy of Informal Economy–a Case Study for the Republic of North Macedonia

In this paper we present some thematic aspects related to the study of informal sector in the Republic of North Macedonia for the period [1998, 2016]. So, by conventional application of CDA model we perceived problematic issues in the estimation of the informal economy. To recover the model aftermaths, we assisted the calculation procedures by additional descriptive analysis aimed on avoiding the regression disturbances from critical dynamics. By evidencing the presence of self-organization regimes in some money-type variables, we identified the intervals where data series behaved highly nonlinearly. Consequently, by excluding parts of series up to a reasonable point (herein before 2004), the CDA predictions for the size of informal economy and the relationship with its factors has been improved remarkably. Next, we used factorial analysis to facilitate the design of the n-p-m MIMIC model. This investigation applied in 22 candidate factors suggested the configuration 9-2-3 as optimal structure for the model. In particular this model anticipated two terms confined in the latent variable structure, respectively in the range [0.35, 0.38] and [0.023, 0.08] part of the GDP. We assigned them as subparts of informal economy reflecting differenced influences or weights of certain cause factors. We observed that the estimated effect of the factors included in the model followed theoretical expectation.