A Glimpse Into the Shadow Economy

By its very nature, the shadow economy is difficult to define. The new Special Issue of Public Finance Review, “The Shadow Economy, Tax Evasion, and Money Laundering,” introduces  research by leading scholars which attempts to clarify the causes and consequences of this global phenomenon. In the lead article, PFR Editor James Alm of Tulane University and Abel Embaye of the University of Arkansas write:

PFR_72ppiRGB_150pixwThe presence of untaxed activities—known as the shadow economy, the black economy, the underground economy , among other terms—is a common occurrence in all countries around the world. Its presence dis- torts resource allocation, changes t he distribution of income in unpredictable ways, and reduces tax collections. In response, governments take many steps to reduce its size. However, these efforts require knowledge of its size, and such estimates are quite difficult to generate. Many methods have been developed to estimate the size of the shadow economy; see especially Schneider and Enste (2000) and Schneider (2005) for comprehensive discussions of these methods and their resulting estimates. In this article , we build on this previous research. We apply dynamic panel estimation methods to the currency demand method, in order to estimate the size of the shadow economy for 111 countries for the years 1984–2006.

Read the article, “Using Dynamic Panel Methods to Estimate Shadow Economies Around the World, 1984–2006,” in the September issue of Public Finance Review, and don’t miss the rest of this Special Issue: The Shadow Economy, Tax Evasion, and Money Laundering.

This entry was posted in Economics, Finance and tagged , , , by Cynthia Nalevanko, Editor, SAGE Publishing. Bookmark the permalink.

About Cynthia Nalevanko, Editor, SAGE Publishing

Founded in 1965, SAGE is the world’s leading independent academic and professional publisher. Known for our commitment to quality and innovation, SAGE has helped inform and educate a global community of scholars, practitioners, researchers, and students across a broad range of subject areas. With over 1500 employees globally from principal offices in Los Angeles, London, New Delhi, Singapore, Washington DC, and Melburne, our publishing program includes more than 1000 journals and over 900 books, reference works and databases a year in business, humanities, social sciences, science, technology and medicine. Believing passionately that engaged scholarship lies at the heart of any healthy society and that education is intrinsically valuable, SAGE aims to be the world’s leading independent academic and professional publisher. This means playing a creative role in society by disseminating teaching and research on a global scale, the cornerstones of which are good, long-term relationships, a focus on our markets, and an ability to combine quality and innovation. Leading authors, editors and societies should feel that SAGE is their natural home: we believe in meeting the range of their needs, and in publishing the best of their work. We are a growing company, and our financial success comes from thinking creatively about our markets and actively responding to the needs of our customers.

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