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
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
Publication date:
9.2.2021.
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