EconPapers    
Economics at your fingertips  
 

Energy based estimation of the Shadow Economy: The role of Governance Quality

Dimitrios Psychoyios (), Olympia Missiou () and Theologos Dergiades ()
Additional contact information
Dimitrios Psychoyios: University of Piraeus
Olympia Missiou: International Hellenic University

Discussion Paper Series from Department of Economics, University of Macedonia

Abstract: The shadow economy (SE) is a pathological normalcy, not only in developing countries but also in developed ones, causing disagreeable distortions in the real economy. In this paper, we estimate the size of the informal sector in nineteen countries of the European Union (EU) by implementing three variations of the physical input approach (we use electricity consumption as input). All estimates show that EU countries experience high shadow economy levels with a decreasing trend. Moreover, we assess the explanatory power of three governance quality indicators of the informal sector using a set of panel regression specifications as well as a set of quantile regression specifications. Both approaches show that overall governance quality is the most prominent factor in determining the SE levels. Given the inherent advantage of quantile regression to identify impact differentiations across the conditional distribution of the dependent variable a significant policy action is revealed. In particular, countries with high shadow economy levels can reduce their informal sector, at an increasing rate, by improving governance quality.

Keywords: Shadow economy; Energy; Panel and Quantile regression; Governance quality. (search for similar items in EconPapers)
JEL-codes: E26 G15 O17 O52 Q43 (search for similar items in EconPapers)
Date: 2019-11, Revised 2019-11
New Economics Papers: this item is included in nep-ene, nep-iue and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://aphrodite.uom.gr/econwp/pdf/dp072019.pdf

Related works:
Journal Article: Energy based estimation of the shadow economy: The role of governance quality (2021) Downloads
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:mcd:mcddps:2019_07

Access Statistics for this paper

More papers in Discussion Paper Series from Department of Economics, University of Macedonia
Bibliographic data for series maintained by Theodore Panagiotidis () and Anastasia Litina ().

 
Page updated 2021-11-25
Handle: RePEc:mcd:mcddps:2019_07