Estimation of the Hidden Economy Using the Currency Demand: A Methodological Revision and an Application to Argentina

13 Pages Posted: 3 Sep 2008

See all articles by Hildegart Ahumada

Hildegart Ahumada

Universidad Torcuato Di Tella - School of Government

Alfredo Canavese

Universidad Torcuato Di Tella

Paula Canavese

affiliation not provided to SSRN

Facundo Gonzalez

affiliation not provided to SSRN

Date Written: June 2, 2003

Abstract

The "monetary method" to measure the size of the shadow economy is based on econometric estimates of the demand for currency. These estimates are used to reckon the currency held by economic agents in excess of the amount they need to finance registered transactions. This excess of currency multiplied by the income-velocity of circulation (assumed to be equal in the registered and the shadow economies) allows measuring unregistered GDP (the size of the shadow economy).

Note: Downloadable document is in Spanish.

Keywords: demand for currency, income-velocity of circulation, measuring unregistered GDP

JEL Classification: H3, K4

Suggested Citation

Ahumada, Hildegart and Canavese, Alfredo and Canavese, Paula and Gonzalez, Facundo, Estimation of the Hidden Economy Using the Currency Demand: A Methodological Revision and an Application to Argentina (June 2, 2003). Revista de Analisis Economico, Vol. 18, No. 1, 2003, Available at SSRN: https://ssrn.com/abstract=1262295

Hildegart Ahumada (Contact Author)

Universidad Torcuato Di Tella - School of Government ( email )

C1428ATG Buenos Aires
Argentina

Alfredo Canavese

Universidad Torcuato Di Tella ( email )

Minones 2159
1428 Buenos Aires, 1428
Argentina

HOME PAGE: http://www.bcu.gub.uy/autoriza/peiees/jor/2006/iees03j3120806.pdf

Paula Canavese

affiliation not provided to SSRN

Facundo Gonzalez

affiliation not provided to SSRN

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