La Demanda de Circulante y la Informalidad en la Argentina 1930-1983

Adrián Guisarri
Authors registered in the RePEc Author Service: Adrián C. Guissarri

Cuadernos de Economía (Latin American Journal of Economics), 1987, vol. 24, issue 72, pages 197-224

Abstract: The slowing down of growth in many countries, developed and developing, as long as some direct evidences of increasing informal activities suggested to many economist that both phenomena are closely related. The enlarging government interferences in the economic activity through prices and production restrictions, all sort of regulations, budget expansion, and the undertaking of new activities by public enterprises, have induced the private economic agents to elude such an enormous burden and restraint of theirs individual economic rights. Argentina is probably one of most representative cases of informality. The purpose of the paper is to have an approximate measure of this phenomenon for Argentina. Among the general methods used to estimate informality is the monetary one. This method was originally suggested by Phillip Cagan in his works on the monetary evolution in the United States and recently improved by Vito Tanzi. Essentially, it is assumed that currency is one of the main instruments to carry out informal transactions since it is difficult to trace back its uses. The method consists in estimating the demand for currency where besides the usual explanatory variables some other are included to represent the causes of informality. In Argentina the variables that explain the "normal" demand for currency, for the period 1930 to 1983, were Gross Domestic Product (GDPJ, real rate of interest and the rate of inflation. The public expenditure with respect to GDP and the spread between the official and the black market exchange rate were included to catch the demand for currency to perform the informal transactions. Once the demand for currency is estimated and assuming the level for these variables that nullify the causes of informality is possible to estimate the currency used for informal transactions. Additionally assuming that the velocity of currency in the informal sector is the same as for the formal sector is possible to calculate which is the GDP that informal currency sustain. For the most recent period analyzed, 1981-1983, the results reported in the paper show that the informal GDP with respect to the official registered GDP in Argentina reached to 62.6 per cent.

Date: 1987

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