Growth and the Interaction Between Money and the Underground Economy

Gerasimos Soldatos

Revue Économique, 1996, vol. 47, issue 1, 73-84

Abstract: [fre] Le fait que les transactions souterraines influencent la croissance et que ces transactions fassent, pour l'essentiel, l'objet d'un règlement monétaire, pose le problème de l'incidence du couple « monnaie-économie souterraine » sur la crois­sance et le bien-être. Cet article traite cette question en introduisant les activités souterraines dans un modèle monétaire de croissance. On en conclut que : 1) en présence de monnaie, les activités souterraines augmentent la production et com­pensent ainsi la baisse de celle-ci qui est due à l'introduction de la monnaie dans une économie de troc à la Solow ; 2) en présence d'activités souterraines, la mon­naie accroît la consommation en compensant la diminution de la production pro­voquée parla monétarisation d'une économie de troc. [eng] The fact that underground transactions do influence growth and that they are carried out mostly in cash, raises questions concerning the impact of the nexus " money-underground economy " on growth and welfare. The present paper stu­dies this issue by introducing analytically underground activities in a monetary model of growth. The main findings of the study are the following two : Firstly, in the presence of money, underground activities increase output thus compensating for the reduction in output brought about by the introduction of money into Solow's barter economy. Secondly, in the presence of underground activities, money enhances consumption thus compensating for the fall in output caused by the introduction of money into a barter economy.

Date: 1996
Note: DOI:10.3406/reco.1996.409760
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