Un modelo Mundell-Fleming con economía ilegal y lavado de dinero

Modeling illegal economy and money laundering: a Mundell-Fleming framework

Sadri Slim

MPRA Paper from University Library of Munich, Germany

Abstract: The purpose of this paper is to present an extended version of the Mundell-Fleming model which allows a macroeconomic analysis of the effects stemming from illegal economy with money laundering on the short-term equilibrium for a small open economy. Without disregarding the FATF´s money laundering typology, we propose to differentiate the money laundering activities by the degree of crime organization, i.e. differentiating between individual, national as well as transnational crimes. According to the previous taxonomy, we postulate four channels of money laundering that enable the reintegration of illegal money, through consumption, investment, international trade and capital movements. In this context, it is shown that the multiplier effect triggered by illegal economic activities is always negative on formal GDP. However, the effect on the interest rate is subtler and depends on the structure of the given economy, which could lead to an appreciation or depreciation of the exchange rate related to the degree of capital mobility.

Keywords: Illegal Economy; Money Laundering; Mundell-Fleming; Flexible Exchange Rate; Multiplier; Money Demand; Liquidity Preference (search for similar items in EconPapers)
JEL-codes: E12 E26 E41 E43 F41 F43 K42 O17 (search for similar items in EconPapers)
Date: 2015-05-29
New Economics Papers: this item is included in nep-mac
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