IMF Working Papers

Shadow Economies Around the World: What Did We Learn Over the Last 20 Years?

By Leandro Medina, Friedrich Schneider

January 24, 2018

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Leandro Medina, and Friedrich Schneider. Shadow Economies Around the World: What Did We Learn Over the Last 20 Years?, (USA: International Monetary Fund, 2018) accessed December 19, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

We undertake an extended discussion of the latest developments about the existing and new estimation methods of the shadow economy. New results on the shadow economy for 158 countries all over the world are presented over 1991 to 2015. Strengths and weaknesses of these methods are assessed and a critical comparison and evaluation of the methods is carried out. The average size of the shadow economy of the 158 countries over 1991 to 2015 is 31.9 percent. The largest ones are Zimbabwe with 60.6 percent, and Bolivia with 62.3 percent of GDP. The lowest ones are Austria with 8.9 percent, and Switzerland with 7.2 percent. The new methods, especially the new macro method, Currency Demand Approach (CDA) and Multiple Indicators Multiple Causes (MIMIC) in a structured hybrid-model based estimation procedure, are promising approaches from an econometric standpoint, alongside some new micro estimates. These estimations come quite close to others used by statistical offices or based on surveys.

Subject: Currencies, Economic sectors, Informal economy, Labor, Labor force participation, Money, National accounts

Keywords: Baltics, Black economy, Comparison of different estimation methods, Corrected shadow economy, Currencies, Estimation result, Government stability, Informal economy, Labor force participation, Labor force participation rate, MIMIC estimation, MIMIC method, Multiple indicators multiple Causes (MIMIC), Predictive mean matching (PMM), Shadow economy, Shadow economy figure, Shadow economy in Sweden, Shadow economy series, Structural equation, Sub-Saharan Africa, Survey, Tax burden, The light intensity approach, WP

Publication Details

  • Pages:

    76

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2018/017

  • Stock No:

    WPIEA2018017

  • ISBN:

    9781484338636

  • ISSN:

    1018-5941

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