SIZE AND IMPLICATION OF UNDERGROUND ECONOMY IN ROMANIA - A MIMIC APPROACH

Corina Ene and Andrei Ştefănescu

Annales Universitatis Apulensis Series Oeconomica, 2011, vol. 1, issue 13, 8

Abstract: Since the economic crisis affected the real economy in Romania, the official GDP declined by almost 5 percent in 2009 compared with 2008, 1.3 percent in 2010 against the previous year and unemployment increased too. In 2011 a moderate growth of the GDP is expected but unemployment will further increase. Against this background the extent of the underground economy in Romania and its development over time are once again the subject of intense debate, as many people will attempt to make up for loss of income in the official economy through greater participation in the underground economy. The objective of this paper is to estimate the size of the underground economy in Romania by using the Multiple Indicators Multiple Causes (MIMIC) method. The MIMIC approach is based on the idea that the underground economy is not a directly observable measure, but it is possible to approximate it using quantitatively measurable causes of working in the underground economy and using indicators in which underground economic activities are reflected. In addition, the paper aims at clarifying to what extent the variables explain the size of the underground economy in Romania.

Keywords: underground economy; Multiple Indicators Multiple Causes (MIMIC); latent variable; structural equation model (search for similar items in EconPapers)
JEL-codes: H26 O17 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://oeconomica.uab.ro/upload/lucrari/1320111/08.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:alu:journl:v:1:y:2011:i:13:p:8

Access Statistics for this article

More articles in Annales Universitatis Apulensis Series Oeconomica from Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia
Bibliographic data for series maintained by Dan-Constantin Danuletiu ().