MAPPING THE SHADOW ECONOMY: SPATIAL VARIATIONS IN THE USE OF HIGH DENOMINATION BANK NOTES IN BRUSSELS (original) (raw)

Explaining the Shadow Economy in Europe

IMF Working Papers

This paper examines the drivers, and reestimates the size of shadow economies in Europe, with a focus on the emerging economies, and recommends policies to increase formality. The size of shadow economies declined across Europe in recent years but remains significant, especially in Eastern Europe. In the emerging European economies, the key determinants of shadow economy size are regulatory quality, government effectiveness, and human capital. The paper argues that a comprehensive package of reforms, focused on country-specific drivers, is needed to successfully combat the shadow economy. The menu of policies most relevant for Europe’s emerging economies include: reducing regulatory and administrative burdens, promoting transparency and improving government effectiveness, as well as improving tax compliance, automating procedures, and promoting electronic payments.

An Analysis of the Shadow Economy in Eu Countries

2016

The paper aims at analysing the dimension of the underground economy in the EU states between 2003 and 2015. In order to achieve this goal, we use qualitative and quantitative methods. In the first two sections of the study we resort to conceptualisation and bring up to date scientific contributions in the field of the shadow economy both in terms of its definition and the methods of quantifying the phenomenon. In the third section, based on the results of the latest research, we identify the dynamics of the underground economy on three levels: the EU-15 (before and after 2005); the EU-10 (before and after the accession of 10 countries in 2005) and the EU-3 (before and after 2007). The main conclusion is that regardless of the reporting level (national, European, world), the real size of the underground economy remains unknown.

Grey Matters: Charting the Development of the Shadow Economy

2016

The shadow economy has long been an area of research for policymakers. The determinants of underground activity of late have been identified as high tax burdens and increased regulation, but has this relationship always existed? This seminal work examines the shadow economy in Norway, Sweden, the United Kingdom and the United States over the past 145 (from 1870 to 2015) years using the Currency Demand Approach and finds that the underground economy is stabilising. To our knowledge this is the first attempt to estimate the size and development of the shadow economy over such a long period and due to this we get some new insights. Our results clearly show that the shadow economy in earlier times was considerably higher than in the last 50 years. This paper also analyses whether a plateau has been reached and questions what efforts could be made to further reduce this informal economy.