The Monetary Method and the Size of the Shadow Economy
A Critical Assessment
Bibliographic Data
| ID | 19035302 |
|---|---|
| Authors | Hildegart Ahumada (0000-0002-0329-8434), Facundo Alvaredo (0009-0002-1530-9150, corresponding author), Alfredo Canavese |
| Year | 2007 |
| Volume | 53 |
| Issue | 2 |
| Pages | 363-371 |
| Publication date | 2007-05-22 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Review of Income and Wealth (JOURNAL) |
| Journal identifiers | ISSN: 0034-6586 • E-ISSN: 1475-4991 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1111/j.1475-4991.2007.00234.x |
| OpenAlex | W2288327775 |
| Language | EN |
| Citations received | 5 |
| References cited | 13 |
A widely applied approach to measure the size of the shadow economy, known as the “monetary method” or the “currency approach,” is based on econometric estimates of the demand for money. These estimates are used to get the currency held by economic agents in excess of the amount they need to finance registered transactions. This excess of currency multiplied by the income‐velocity of circulation (assumed to be equal in the registered and shadow economies) gives a measure of the hidden GDP. This paper shows that the monetary method only produces coherent estimates if the income‐elasticity of the demand for currency is one and suggests a way to correct the estimated size of the shadow economy when such elasticity is not one. The correction is applied to existent measures for different countries
Currency · Demand for money · Econometrics · Economics · Economy · Income elasticity of demand · Macroeconomics · Monetary economics · Monetary policy · Corporate Taxation and Avoidance · Fiscal Policy and Economic Growth · Taxation and Compliance Studies
New Estimates for the Shadow Economies all over the World
The Long Shadow of Informality
The monetary method to measure the shadow economy
The Monetary Method to Measure the Size of the Shadow Economy
Can informal economic activities be explained by social and institutional factors? A comparative analysis
| Unique citing works | 5 |
|---|---|
| Citations per year | 0,28 |
| Citation span | 2008 - 2022 (15) |
| Citation velocity | historical |
| Highly cited | No |
| Citation types | Neutral: 5 |