Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/181343
Authors: 
Seitz, Franz
Reimers, Hans-Eggert
Schneider, Friedrich
Year of Publication: 
2018
Series/Report no.: 
CESifo Working Paper No. 7143
Abstract: 
We analyze the net issues of the national euro area central banks in relation to the dynamics of the shadow economy within a panel cointegration framework. Besides the total net issues, we distinguish between large, medium and small euro banknotes and take due account of other determinants of cash demand. We find a significant and positive relationship between the net issues and the size of the shadow economy only for medium notes. And this result seems to be driven by the smaller euro area countries. The use of large and small denominations is obviously not driven by the shadow economy. For comparison purposes, we also present panel results for eight non-euro area countries (Australia, Canada, Japan, Norway, Sweden, Switzerland, UK, US). For these countries, we are not able to establish an economically meaningful and statistically significant cash demand equation including the shadow economy.
Subjects: 
banknotes
net issues
shadow economy
cash demand function
panel cointegration
JEL: 
C23
E41
E58
Document Type: 
Working Paper

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