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

Friedrich Schneider ()

No 2013-19, Economics working papers from Department of Economics, Johannes Kepler University Linz, Austria

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: O17 O5 D78 H2 H11 H26 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-iue and nep-lam
Date: 2013-10
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http://www.econ.jku.at/papers/2013/wp1319.pdf (application/pdf)

Related works:
Journal Article: The Shadow Economy in Colombia: Size and Effects on Economic Growth (2014) Downloads
Working Paper: The shadow economy in Colombia: size and effects on economic growth (2007) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:jku:econwp:2013_19

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