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How Reliable are the Estimates of the Underground Economy?


  • Christopher Bajada

    () (University of Technology, Sydney)


Economists have proposed several different econometric techniques for measuring the underground economy but these estimates have varied widely and have cast doubts on their credibility and usefulness. This paper describes a dynamic bootstrap routine for constructing confidence intervals for these estimates. This approach avoids the need for subjective opinion on the relative merit of each technique and offers a way to assess the reliability of the various econometric methodologies that have been used.

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  • Christopher Bajada, 2002. "How Reliable are the Estimates of the Underground Economy?," Economics Bulletin, AccessEcon, vol. 3(14), pages 1-11.
  • Handle: RePEc:ebl:ecbull:eb-02c10002

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    References listed on IDEAS

    1. Philip Cagan, 1958. "The Demand for Currency Relative to Total Money Supply," NBER Chapters,in: The Demand for Currency Relative to Total Money Supply, pages 1-37 National Bureau of Economic Research, Inc.
    2. Bajada, Christopher, 1999. "Estimates of the Underground Economy in Australia," The Economic Record, The Economic Society of Australia, vol. 75(231), pages 369-384, December.
    3. Edgar L. Feige, 2004. "How Big IS the Irregular Economy?," Macroeconomics 0404005, EconWPA.
    4. Thomas, Jim, 1999. "Quantifying the Black Economy: 'Measurement without Theory' Yet Again?," Economic Journal, Royal Economic Society, vol. 109(456), pages 381-389, June.
    5. Phillip Cagan, 1958. "The Demand for Currency Relative to the Total Money Supply," Journal of Political Economy, University of Chicago Press, vol. 66, pages 303-303.
    6. Engle, Robert F, 1982. "Autoregressive Conditional Heteroscedasticity with Estimates of the Variance of United Kingdom Inflation," Econometrica, Econometric Society, vol. 50(4), pages 987-1007, July.
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    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General


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