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The Economics Of Money Laundering

Author

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  • Patrycja Chodnicka

    (University of Warsaw)

Abstract

In the paper was taken problem of money laundering in respect of receiving income and incurring expenses. It was looked at economy as whole and individual entities that are households, companies, government and foreign countries which exercising significant influence on particular government decisions. In this purpose was characterized and researched problem of legalizing funds generated by illegal activities by using two - sector equilibrium model. Model is based on activities first two of four mentioned participants. In this model it was used two sectors of economy: legal and illegal. For better understanding problem, model was adapted to polish economy and verified. As a result were received factors which had deciding influence on quantity of money laundering. Offering services and legalization funds generated by illegal activities has got negative correlation with increasing sanctions which are applying in case of detection and transactional costs. Optimal quantity of money laundering depends on workforce costs and prices both goods becoming form legal and illegal economy. Moreover it was drawn attention to bigger effectiveness of foreign cooperation than implementation of national anti-money laundering policy.

Suggested Citation

  • Patrycja Chodnicka, 2011. "The Economics Of Money Laundering," Oeconomia Copernicana, Institute of Economic Research, vol. 2(4), pages 73-95, December.
    • Handle: RePEc:pes:ieroec:v:2:y:2011:i:4:p:73-95
    DOI: 10.12775/OeC.2011.019
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    More about this item

    Keywords

    money laundering; two-sector equilibrium model; illegal economy;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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