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Integrating national accounting and macroeconomic approaches to estimate the underground, informal, and illegal economy in European countries

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  • Roberto Dell’Anno

    (University of Salerno)

Abstract

This article proposes a hybrid national accounts (NA)-macroeconometric approach to fill the gap between the demand for reliable and internationally comparable estimates and the sparse availability of official statistics based on the NA approach. The proposed method combines data from Eurostat’s Tabular approach for the exhaustiveness of NA with estimates based on theoretical hypotheses on the drivers of non-observed production. We estimate underground, informal, and illegal economies for 22 European countries over the period 2000–2020.

Suggested Citation

  • Roberto Dell’Anno, 2025. "Integrating national accounting and macroeconomic approaches to estimate the underground, informal, and illegal economy in European countries," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 32(2), pages 526-565, April.
    • Handle: RePEc:kap:itaxpf:v:32:y:2025:i:2:d:10.1007_s10797-024-09835-y
    DOI: 10.1007/s10797-024-09835-y
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    References listed on IDEAS

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    1. Feige, Edgar L., 2015. "Reflections on the meaning and measurement of Unobserved Economies: What do we really know about the “Shadow Economy”?," MPRA Paper 68466, University Library of Munich, Germany.
    2. Schneider, Friedrich, 2005. "Shadow economies around the world: what do we really know?," European Journal of Political Economy, Elsevier, vol. 21(3), pages 598-642, September.
    3. Friedrich Schneider, 2023. "Do Different Estimation Methods Lead to Implausible Differences in the Size of Nonobserved or Shadow Economies? A Preliminary Answer," Annual Review of Resource Economics, Annual Reviews, vol. 15(1), pages 257-277, October.
    4. Gabriel Ulyssea, 2020. "Informality: Causes and Consequences for Development," Annual Review of Economics, Annual Reviews, vol. 12(1), pages 525-546, August.
    5. Piotr Dybka & Michał Kowalczuk & Bartosz Olesiński & Andrzej Torój & Marek Rozkrut, 2019. "Currency demand and MIMIC models: towards a structured hybrid method of measuring the shadow economy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(1), pages 4-40, February.
    6. Friedrich Schneider, 2005. "Shadow Economies of 145 Countries all over the World: What Do We Really Know?," CREMA Working Paper Series 2005-13, Center for Research in Economics, Management and the Arts (CREMA).
    7. Piotr Dybka & Bartosz Olesiński & Marek Rozkrut & Andrzej Torój, 2023. "Measuring the model uncertainty of shadow economy estimates," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(4), pages 1069-1106, August.
    8. Hildegart Ahumada & Facundo Alvaredo & Alfredo Canavese, 2009. "The Monetary Method to Measure the Size of the Shadow Economy. A Critical Examination of its Use," Revue économique, Presses de Sciences-Po, vol. 60(5), pages 1069-1078.
    9. Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
    10. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    11. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Underground economy; Informal economy; Illegal economy; Shadow economy; NOE;
    All these keywords.

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • C39 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Other
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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