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Original scientific paper

https://doi.org/10.1080/1331677X.2019.1706601

Measuring the shadow economy and its drivers: the case of peripheral EMU countries

Vicent Almenar
José Luis Sánchez
Juan Sapena


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page 2904-2918

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Abstract

We adopt a long-run perspective to investigate the size of the
shadow economy and explore the trends in this area. The analysis
is based on a panel of peripheral EMU countries over the period
1965-2015. Our empirical approach relies on a multiple indicators
and multiple causes (MIMIC) framework. This approach is a variant
of structural equation modelling (SEM). We used two sets of variables,
(i.e. potential determinants and indicator variables) to estimate
an underlying (unobserved) index that measures the
evolution of the shadow economy. Ascertaining the relative
importance of the shadow economy enabled analysis of its relationship
with other institutional and social issues (e.g. corruption,
productivity and economic growth), and helped identify the channels
through which the shadow economy might negatively influence
the performance of different economies. In the sampled
countries, shadow activity increased over the study period. It also
seemed to be affected by the economic cycle.

Keywords

Shadow economy; structural equation modelling; multiple indicators multiple causes models; European Economic and Monetary Union

Hrčak ID:

254668

URI

https://hrcak.srce.hr/254668

Publication date:

9.2.2021.

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