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Title:Size and causes of the underground economy in Spain: A correction of the record and new evidence from the MCDR approach PDF Logo
Authors:Pickhardt, Michael
Sardà, Jordi
Issue Date:2011
Series/Report no.:CAWM discussion paper / Centrum für Angewandte Wirtschaftsforschung Münster 54
Abstract:We review existing estimates of the size of the Spanish underground economy, apply the Ahumada et al. (2007, RIW) correction procedure to some of them and calculate the size of the underground economy in Spain for the period 1960 through 2009 by using the modified-cash-deposits-ratio (MCDR) approach recently developed by Pickhardt and Sardà (2011, EJLE). We then extend the MCDR approach with respect to an analysis of the causes of the Spanish underground economy. Contrary to most other studies, we show that the latter is not predominantly caused by tax pressure, but by labor market aspects, macroeconomic influences and criminal activities. Based on these findings we derive some unprecedented policy recommendations.
Subjects:underground economy
shadow economy
hidden economy
black economy
cash-deposit-ratio
currency demand approach
MIMIC approach
JEL:O17
H26
C22
Document Type:Working Paper
Appears in Collections:CAWM Discussion Papers, Universität Münster

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