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Shadow Economies Around the World: New Results for 158 Countries Over 1991-2015

30 Pages Posted: 11 May 2017  

Leandro Medina

George Washington University - Department of Economics; International Monetary Fund (IMF) - Western Hemisphere Department

Friedrich Schneider

Johannes Kepler University Linz - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Institute for the Study of Labor (IZA)

Date Written: April 10, 2017

Abstract

Using the MIMIC method, this paper is a first attempt to estimate the size of the shadow economy of 158 countries over the period 1991 up to 2015. In addition to performing a variety of robustness tests, this paper explicitly addresses endogeneity concerns to the use of GDP as cause and indicator, by using the light intensity approach as an indicator variable as proxy for the size of the economy. Results suggest that the average size of the shadow economy of these 158 countries over 1991-2015 is 32.5% of official GDP, which was 34.82% in 1991 and decreased to 30.66% in 2015.

Keywords: shadow economies of 158 countries, MIMIC estimations, the light intensity approach, tax burden, regulation, trade openness, corruption

JEL Classification: C390, C510, C820, H110, H260, U170

Suggested Citation

Medina, Leandro and Schneider, Friedrich, Shadow Economies Around the World: New Results for 158 Countries Over 1991-2015 (April 10, 2017). CESifo Working Paper Series No. 6430. Available at SSRN: https://ssrn.com/abstract=2965972

Leandro Medina

George Washington University - Department of Economics ( email )

Monroe Hall, Suite 340
2115 G Street, NW
Washington, DC 20052
United States

International Monetary Fund (IMF) - Western Hemisphere Department

700 19th Street NW
Washington, DC 20431
United States

Friedrich G. Schneider (Contact Author)

Johannes Kepler University Linz - Department of Economics ( email )

Altenbergerstrasse 69
A-4040 Linz, 4040
Austria
+43 732 2468 8210 (Phone)
+43 732 2468 8208 (Fax)

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

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Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Institute for the Study of Labor (IZA)

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Bonn, D-53072
Germany

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