The shadow economy Kuznets’s curve panel data analysis

Hesam Nikopour (), Muzafar Shah Habibullah and Friedrich Schneider ()

MPRA Paper from University Library of Munich, Germany

Abstract: The review of recent literature shows the relationship between shadow economy and economic growth is ambiguous. This paper attempts to answer whether the relationship between shadow economy and economic growth depends on the level of development or not? In this way, the Shadow Economy Kuznets’s Curve (SEKC) is estimated in two quadratic -Inverted U- and cubic -N shape- functional form by using shadow economies data of 21 selected OECD countries for time period of 1995-2006. The panel data analyses results show that cubic functional form justifies the relationship between shadow economy and economic growth better, this relationship depends on the level of development and the shadow economy has a positive effect on the official economy.

Keywords: Shadow economy; economic growth; Kuznets’s curve; panel data analysis; OECD (search for similar items in EconPapers)
JEL-codes: C23 O17 O4 (search for similar items in EconPapers)
Date: 2008-12-23
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Citations: View citations in EconPapers (2)

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