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Hidden Economy in Bulgaria Estimated by the MIMIC Approach

Author

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  • Vessela Dimitrova

    (University of National and World Economy, Sofia, Bulgaria)

Abstract

The article is devoted to an assessment of the shadow economy in Bulgaria for the 2003 – 2023 period based on an empirical analysis of major relationships between selected macroeconomic indicators. The source of data used are official Bulgarian institutions like the National Statistical Institute (NSI), the Ministry of Finance (MF), and the Bulgarian National Bank (BNB). An econometric analysis is carried out applying the MIMIC approach. The results show that the size of the shadow economy for the studied period has increased from 35% in GDP for 2003 to 40% for 2009-2010. For the 2014-2022 period, this percentage has decreased and stabilized at levels of 35-37%. Despite a decreasing trend in the share of the shadow economy, it still represents a substantial part of the official economy of Bulgaria.

Suggested Citation

  • Vessela Dimitrova, 2024. "Hidden Economy in Bulgaria Estimated by the MIMIC Approach," Ikonomiceski i Sotsialni Alternativi, University of National and World Economy, Sofia, Bulgaria, issue 4, pages 35-51, December.
  • Handle: RePEc:nwe:iisabg:y:2024:i:4:p:36-51
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    File URL: https://www.unwe.bg/doi/alternativi/2024.4/ISA.2024.4.03.pdf
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    More about this item

    Keywords

    Bulgaria; GDP; econometric analysis; hidden economy; MIMIC model;
    All these keywords.

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • C39 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Other
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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