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Aspects Estimating the Level of the Informal Economy

Ionela Adriana Tisca, Georgica Cornu and Dan Dumitrescu
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Ionela Adriana Tisca: Politehnica University Timisoara, Romania
Georgica Cornu: Politehnica University Timisoara, Romania
Dan Dumitrescu: Politehnica University Timisoara, Romania

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Abstract: This paper synthesises the estimation and evaluation methods of level of the informal economy. Regarded directly, the evaluation of the informal economy can be accepted to be the difference between the real economy and the economy officially declared. At a more detailed evaluation, the process proves more complicated because its approach must consider specific aspects such as the statistical identification of activities carried out, and the possibility of using standard time and the evaluated standard value. Of the many methods used, we highlight the following: the gap between expenditure and revenue method, the physical input method, the analysis of the transaction’s volume method (Feign method).The estimation and evaluation methods take into account the values obtained in the Romanian informal economy, with applications in several years. The paper refers to three main groups of methods: the analysis of time series based on cash demand, the estimation based on the discrepancy between the aggregate total revenue and total expenditure, the estimation based on discrepancies between income and expenditure at the micro-economic level. In the structure of the informal economy, this paper highlights the main ways of committing tax fraud and smuggling, which are manifested in various forms.

Keywords: official income; informal income; tax evasion; informal economy estimation-model (search for similar items in EconPapers)
Date: 2015
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