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Application Of Monetary Models For Estimating Underground Economy In Romania

Author

Listed:
  • CORINA MARIA ENE

    () (Hyperion University from Bucharest, Romania)

  • CARMEN MARILENA UZLAU

    () (Institute for Economic Forecasting, Romania)

Abstract

Article addresses the issue of sizing the underground economy by recognized methods in the literature based on empirical data provided by official statistics in Romania. The monetary method to assess non-accounted economy dynamics studies to date has defined two types of measurements in terms of velocity of money. The first is the accountability one, used in banking statistics, calculated by reporting GDP to the money supply from the M2 point of view, and the second was called operational, considered to be the real one, meaning the equivalence between the volume of transactions and the GDP (including commercial credit) which comes for the monetary unit. The relationship between the two methods was achieved by means of a β coefficient, which measures the monetary distortion induced by arrears and the disturbing form of "dollarization" of the economy. Also to be noted that there are not yet adequate information and a suitable algorithm to reasonably approximate the output size of unreported taxable income, of household production for own consumption and of illegal economic activities. Therefore, we must resort to partial estimates, and their use must be considered with care all the conceptual and statistical assumptions on which they rely.

Suggested Citation

  • Corina Maria Ene & Carmen Marilena Uzlau, 2012. "Application Of Monetary Models For Estimating Underground Economy In Romania," New Trends in Modelling and Economic Forecast (MEF 2011), ROMANIAN ACADEMY – INSTITUTE FOR ECONOMIC FORECASTING;"Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences, vol. 1(1), pages 140-151, January.
  • Handle: RePEc:ntu:ntumef:vol1-iss1-12-140
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    More about this item

    Keywords

    underground economy; monetary rate method; simple cash demand method; method of transaction;

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy

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