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Restricting or Abolishing Cash: An Effective Instrument for Fighting the Shadow Economy, Crime and Terrorism?

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  • Friedrich Schneider

Abstract

This paper has four goals: First, the use of cash as a possible driving factor of the shadow economy is investigated. Second, the use of cash in crime, here especially in corruption, is also econometrically investigated. The influence is somewhat larger than on the shadow economy, but it is certainly not a decisive factor for bribery activities. Some figures about organized crime are also shown; the importance of cash is diminishing. Third, some remarks about terrorism are made and here a cash limit doesn’t prevent terrorism. Fourth, some remarks are made about the restriction or abolishment of cash on civil liberties, with the result that this will extremely limit them. The conclusion of this paper is that cash has a minor influence on the shadow economy, crime and terrorism, but potentially a major influence on civil liberties.

Suggested Citation

  • Friedrich Schneider, 2017. "Restricting or Abolishing Cash: An Effective Instrument for Fighting the Shadow Economy, Crime and Terrorism?," Economics working papers 2017-08, Department of Economics, Johannes Kepler University Linz, Austria.
  • Handle: RePEc:jku:econwp:2017_08
    Note: English
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    2. 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.
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    5. Putniņš, Tālis J. & Sauka, Arnis, 2015. "Measuring the shadow economy using company managers," Journal of Comparative Economics, Elsevier, vol. 43(2), pages 471-490.
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    9. Friedrich Schneider & Dominik Enste, 1999. "Shadow Economies Around the World - Size, Causes, and Consequences," CESifo Working Paper Series 196, CESifo.
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    13. James Alm & Abel Embaye, 2013. "Using Dynamic Panel Methods to Estimate Shadow Economies Around the World, 1984-2006," Working Papers 1303, Tulane University, Department of Economics.
    14. Schneider, Friedrich G. & Buehn, Andreas, 2009. "Shadow economies and corruption all over the world: revised estimates for 120 countries," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW), vol. 1, pages 1-53.
    15. Schneider, Friedrich G., 2007. "Shadow Economies and Corruption All Over the World: New Estimates for 145 Countries," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW), vol. 1, pages 1-66.
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    19. Zdanowicz John S., 2009. "Trade-Based Money Laundering and Terrorist Financing," Review of Law & Economics, De Gruyter, vol. 5(2), pages 855-878, December.
    20. Lars P. Feld & Friedrich Schneider, 2010. "Survey on the Shadow Economy and Undeclared Earnings in OECD Countries," German Economic Review, Verein für Socialpolitik, vol. 11(2), pages 109-149, May.
    21. Marcus Ruge, 2010. "Determinants and Size of the Shadow Economy - A Structural Equation Model," International Economic Journal, Taylor & Francis Journals, vol. 24(4), pages 511-523.
    22. 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).
    23. Frey, Bruno S & Weck, Hannelore, 1983. "Estimating the Shadow Economy: A 'Naive' Approach," Oxford Economic Papers, Oxford University Press, vol. 35(1), pages 23-44, March.
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    27. Feige, Edgar L., 2016. "Professor Schneider's Shadow Economy:What do we really know? A Rejoinder," MPRA Paper 71903, University Library of Munich, Germany.
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    Cited by:

    1. Hendrickson, Joshua R. & Park, Jaevin, 2021. "The case against eliminating large denomination bills," Journal of Macroeconomics, Elsevier, vol. 68(C).

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    More about this item

    Keywords

    cash; cash limit; shadow economy; crime; corruption; transnational crime organizations; financial proceeds; money laundering; illegal cross-border flows; tax fraud figures.;
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