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Analysis of the shadow economy in the Spanish regions

Author

Listed:
  • González-Fernández, Marcos
  • González-Velasco, Carmen
Abstract
The aim of this paper is to analyze the shadow economy in the Spanish Autonomous Communities. In so doing, we employ the Currency Demand Approach to analyze the 1987–2010 period. The results show that the size of the shadow economy ranges from 18% to 30% of regional GDP and an approximate mean value of 25% for the entire territory. The Personal Income Tax has the greatest impact on the shadow economy. By region, Andalucía and the Islas Canarias have the highest values for the shadow economy, whereas Madrid presents the lowest value. We extract some implications for the public authorities.

Suggested Citation

  • González-Fernández, Marcos & González-Velasco, Carmen, 2015. "Analysis of the shadow economy in the Spanish regions," Journal of Policy Modeling, Elsevier, vol. 37(6), pages 1049-1064.
    • Handle: RePEc:eee:jpolmo:v:37:y:2015:i:6:p:1049-1064
    DOI: 10.1016/j.jpolmod.2015.09.006
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    References listed on IDEAS

    as
    1. Schneider, Friedrich, 2005. "Shadow economies around the world: what do we really know?," European Journal of Political Economy, Elsevier, vol. 21(3), pages 598-642, September.
    2. Michael Pickhardt & Jordi Sardà, 2015. "Size and causes of the underground economy in Spain: a correction of the record and new evidence from the MCDR approach," European Journal of Law and Economics, Springer, vol. 39(2), pages 403-429, April.
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    Cited by:

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    2. Novkovska, Blagica, 2016. "How Strongly The Hidden Economy Of A Small Country Can Be Influenced By Drastic Events: Case Of Macedonia," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 7(2), pages 187-195.

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    More about this item

    Keywords

    Shadow economy; Currency Demand Approach; Black economy; Hidden economy; Black market;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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