Organized Crime, Money Laundering and Legal Economy: Theory and Simulations

Posted: 21 Jul 2018

See all articles by Raffaella Barone

Raffaella Barone

University of Salento - Department of Law

Donato Masciandaro

Bocconi University - Department of Economics

Date Written: August 1, 2011

Abstract

This paper proposes a dynamic model to simulate the relationships between the profits of organized crime, money laundering and legal investments. We develop a macro framework in which organized crime can increase its possibilities to invest in the legal sector by resorting to effective but costly money laundering schemes. The model explores the conditions under which the effectiveness of money laundering causes a positive trend in the legal assets owned by the criminal organizations. We use the model to simulate the total amount of legal wealth generated by organized crime through drug trafficking in different world regions, with particular attention to Europe.

Keywords: Organized crime, Money laundering, Shadow economy

JEL Classification: G28, F30, F33, F42, K14, K23

Suggested Citation

Barone, Raffaella and Masciandaro, Donato, Organized Crime, Money Laundering and Legal Economy: Theory and Simulations (August 1, 2011). European Journal of Law and Economics, August 2011, Volume 32, Issue 1, pp 115–142, Available at SSRN: https://ssrn.com/abstract=3204359

Raffaella Barone (Contact Author)

University of Salento - Department of Law ( email )

Campus Universitario - Via Li Tufi
LECCE, LE 73020
Italy

Donato Masciandaro

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

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