A Note on Measuring the Unofficial Economy in the Former Soviet Republics

Michael Alexeev and William Pyle

Middlebury College Working Paper Series from Middlebury College, Department of Economics

Abstract: This note argues that the most commonly used estimates of the size of the unofficial economies in the former Soviet Republics are flawed. Most important, they are based on calculations that disregard the variation in unofficial economic activity across space in the pre-transition Soviet Union. In addition, these estimates appear to understate the size of the unofficial economies in these countries. We propose alternative estimates and find that they are more strongly related to the institutional factors commonly used to explain the size of the unofficial sector. Our estimates also show that the size of a country's pre-transition unofficial economy is an important predictor of its size during the transition. This suggests that the size of the unofficial economy is to a large extent a historical phenomenon only partly determined by contemporary institutional factors.

Keywords: hidden economy; transition economies (search for similar items in EconPapers)
JEL-codes: O17 P2 P3 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2002-07
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Working Paper: A Note on Measuring the Unofficial Economy in the Former Soviet Republics (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:mdl:mdlpap:0230

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