Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93062
Authors: 
Duarte, Pablo
Year of Publication: 
2014
Series/Report no.: 
Working Paper, Universität Leipzig, Wirtschaftswissenschaftliche Fakultät 127
Abstract: 
The empirical evidence on the linkage of the informal economy and GDP is ambiguous. It depends on the method used to estimate the size of the informal economy. I propose a common factor of four different approximations of the size of the informal economy as an alternative. Using Spain as an example I find that GDP Granger-causes informality, but not the other way around. I also find that positive GDP shocks induce positive and statistically significant responses of the size of the informal economy.
Subjects: 
informal economy
dynamic factor model
JEL: 
C38
O17
Document Type: 
Working Paper

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