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An Econometric Method of Estimating the 'Hidden Economy,' United Kingdom (1960-1984): Estimates and Tests

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  • Bhattacharyya, Dilip K

Abstract

In this paper, a method of estimating the unrecorded part of the GNP based on a modified RESET procedure applied to a currency demand equation is proposed. The model passes all standard diagnostic tests and the estimates of the unrecorded economy provide plausible answers when used as a proxy for the tax-evaded income. The method is easily applicable to most countries with minor modifications. Copyright 1990 by Royal Economic Society.

Suggested Citation

  • Bhattacharyya, Dilip K, 1990. "An Econometric Method of Estimating the 'Hidden Economy,' United Kingdom (1960-1984): Estimates and Tests," Economic Journal, Royal Economic Society, vol. 100(402), pages 703-717, September.
    • Handle: RePEc:ecj:econjl:v:100:y:1990:i:402:p:703-17
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    Cited by:

    1. Psychoyios, Dimitrios & Missiou, Olympia & Dergiades, Theologos, 2021. "Energy based estimation of the shadow economy: The role of governance quality," The Quarterly Review of Economics and Finance, Elsevier, vol. 80(C), pages 797-808.
    2. Philippe Adair, 2012. "The Non-Observed Economy in the European Union Countries (EU-15): A Comparative Analysis of Estimates," Chapters, in: Michael Pickhardt & Aloys Prinz (ed.), Tax Evasion and the Shadow Economy, chapter 5, Edward Elgar Publishing.
    3. James Alm & Abel Embaye, 2013. "Using Dynamic Panel Methods to Estimate Shadow Economies Around the World, 1984–2006," Public Finance Review, , vol. 41(5), pages 510-543, September.
    4. repec:bla:jcmkts:v:45:y:2007:i::p:999-1010 is not listed on IDEAS
    5. Mariá Dolores Gadea & José Mariá Serrano-Sanz, 2002. "The hidden economy in Spain - A monetary estimation, 1964-1998," Empirical Economics, Springer, vol. 27(3), pages 499-527.
    6. Gemmell, Norman & Hasseldine, John, 2012. "The Tax Gap: A Methodological Review," Working Paper Series 18717, Victoria University of Wellington, Chair in Public Finance.
    7. Medina-Smith, Emilio, 2003. "Four essays on economic growth in Venezuela 1950-1999," Economics PhD Theses 0503, Department of Economics, University of Sussex Business School.
    8. 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.
    9. George M. Georgiou & George Syrichas, 1994. "The Underground Economy: An Overview and Estimates for Cyprus," Working Papers 1994, Central Bank of Cyprus.
    10. George M. Georgiou, 2007. "Measuring the Size of the Informal Economy: A Critical Review," Working Papers 2007-1, Central Bank of Cyprus.
    11. Amendolagine, Vito & Capolupo, Rosa & Ferri, Giovanni, 2014. "Innovativeness, offshoring and black economy decisions. Evidence from Italian manufacturing firms," International Business Review, Elsevier, vol. 23(6), pages 1153-1166.
    12. Dario Cziraky & Max Gillman, 2004. "Inflation and Endogenous Growth in Underground Economies," wiiw Balkan Observatory Working Papers 50, The Vienna Institute for International Economic Studies, wiiw.
    13. Rossitsa Rangelova, 1999. "Endogenous Growth Theory: Rise and Developments," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 3-27.
    14. George M. Georgiou, 2007. "Measuring the Size of the Informal Economy: A Critical Review," Working Papers 2007, Central Bank of Cyprus.
    15. Colin C. Williams, 2014. "Confronting the Shadow Economy," Books, Edward Elgar Publishing, number 15370.
    16. Ozan Gülhan & Alban Hetemi & Egzon Osmani, 2020. "Determinants of the Informal Economy in EU Countries," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 23(75), pages 2-15, March.
    17. Matsaganis, Manos & Flevotomou, Maria, 2010. "Distributional implications of tax evasion in Greece," LSE Research Online Documents on Economics 26074, London School of Economics and Political Science, LSE Library.
    18. Philippe Adair, 2009. "Économie non observée et emploi informel dans les pays de l'Union européenne. Une comparaison des estimations et des déterminants," Revue économique, Presses de Sciences-Po, vol. 60(5), pages 1117-1153.
    19. Manos Matsaganis & Maria Flevotomou, 2010. "Distributional Implications of Tax Evasion in Greece," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 31, Hellenic Observatory, LSE.
    20. Kent Matthews & Jean Lloyd-Williams, 2000. "Have VAT rates reached their limit?: an empirical note," Applied Economics Letters, Taylor & Francis Journals, vol. 7(2), pages 111-115.

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