The shadow economy is a topic that has been around for many years now. The increasing regulations on cash and the endeavours public authorities made to enlarge the tax base show a clear intention from the public sector to pursue any activity that is carried out outside the borders of what is taxable. This paper uses the Currency Demand Approach (CDA) to estimate the monetary base M0 for Portugal, Italy, Greece, and Spain and for each year from 2002 to 2021 and, subsequently, calculate the size of the shadow economy as a percentage of GDP. To estimate the CDA equation, we employed fixed effects panel data regression. The results show an average shadow economy value of 9,33% for Greece; 13,43% for Italy; 10,78% for Portugal; and 11,11% for Spain. The results have also been compared with those of previous studies that have estimated the shadow economy of other countries using the MIMIC approach, showing that the CDA tends to give lower estimates. Additionally, a common trend was found for the studied countries since after the financial crisis of 2008 and 2014, all of them reached peak values in their shadow economies.
| Identifer | oai:union.ndltd.org:UPSALLA1/oai:DiVA.org:hv-20501 |
| Date | January 2023 |
| Creators | Dabija, Stefan, Rivas Salvadó, Ahinoa |
| Publisher | Högskolan Väst, Institutionen för ekonomi och it |
| Source Sets | DiVA Archive at Upsalla University |
| Language | English |
| Detected Language | English |
| Type | Student thesis, info:eu-repo/semantics/bachelorThesis, text |
| Format | application/pdf |
| Rights | info:eu-repo/semantics/openAccess |
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