The Shadow Economy in Colombia: Size and Effects on Economic Growth

Friedrich Schneider () and Hametner Bettina
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Hametner Bettina: Economist, Austria

Peace Economics, Peace Science, and Public Policy, 2014, vol. 20, issue 2, 293-325

Abstract: Using the currency demand approach, size and development of Colombia’s shadow economy are estimated over the period from 1980 to 2012. The results show a great extent of shadow economic activity varying over time between 27 and 56% of GDP. The most important factors driving the shadow economy are indirect taxation and unemployment. Analyzing the interaction between shadow and official economy, the shadow economy has a negative effect on the official one. Average growth of real per capita GDP is 1.86% between 1980 and 2012, without shadow economy it would have been higher around 0.12 percentage points on average.

Keywords: Colombian shadow economy; currency demand method; taxation; unemployment; interaction between the shadow and official economy (search for similar items in EconPapers)
JEL-codes: D78 H11 H2 H26 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (29)

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Related works:
Working Paper: The Shadow Economy in Colombia: Size and Effect on Economic Growth (2013)
Working Paper: The shadow economy in Colombia: size and effects on economic growth (2007)
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DOI: 10.1515/peps-2013-0059

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