It is widely acknowledged that underground (unrecorded) economic activities play a major role in transition economies. Evaluations of the success and failure of the transition experience should therefore be based on total economic activity [TEA], namely, the sum of recorded and unrecorded...

In many countries the shadow employment has a very high priority among policymakers. A new time series for this component of the labour market has been recently released by the Italian institute of statistics. Taken together they give the motivation and the occasion for a fresh analysis of the...

The size, growth and causes of the US “underground economy” are examined in light of new estimates of foreign holdings of US currency. World dollarization partially resolves the “currency enigma” which refers to the anomaly that roughly 80% of the US currency supply is “missing” and...

This paper examines the available evidence on the size the UK’s underground (unobserved) economy and presents preliminary evidence on the size and growth of the unobserved economy for the period 1960-1980 based on Feige’s transaction approach. Reference: Journal of Economic Affairs, Vol.1...

The aim of this paper is twofold. First, new annual data on Italian irregular sector for the period 1980-1991 are reconstructed. These data are compatible with the available 1992-2001 official data. Second, based on this self-consistent “long” sample a time series analysis of the two sides...

Recent research on the unobserved economy suggests that the phenomenon has important implications for both macroeconomic policy and public finance. Attention is focused on the public finance implications by examining a macro-model model from which it is possible to derive a family of Laffer...

This paper examines alternative specifications of a general currency ratio (GCR)model used to obtain macroeconomic estimates of the size and growth of the 'underground economy'. Tanzi's approach to estimating the underground economy is shown to be a variation of the GCR model. However both his...

The two most prominent deadweight losses in public finance are the triangle loss from taxation and the rectangle loss from rent-seeking. This paper suggests that a third type of deadweight loss can rival these two in size and deserves detailed exploration. In the presence of the underground...

MIMIC models are being used to estimate the size of the underground economy or the tax gap in various countries. In this paper I examine critically both the method in general and three applications of the method by Giles and Tedds (2002), Bajada and Schneider (2005) and Dell’Anno and Schneider...

We examine the extent, causes and consequences of the use of foreign currency as a co-circulating medium of exchange and store of value in Latin America. Using new estimates of the amount of foreign currency in circulation in the form of US dollars, we obtain unique measures of currency...