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Transactions: WSEAS TRANSACTIONS ON BUSINESS AND ECONOMICS
Transactions ID Number: 88-214
Full Name: Adriana AnaMaria Alexandru
Position: Ph.D. Candidate
Age: ON
Sex: Female
Address: 6-8 Povernei Street, 010643, Bucharest, Romania
Country: ROMANIA
Tel: +40723.374.735
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E-mail address: adrianaalexandru@yahoo.com
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Title of the Paper: The relationship between unemployment rate and the size of the shadow economy. The case of United States
Authors as they appear in the Paper: Adriana AnaMaria Alexandru, Ion Dobre, Catalin Ghinararu
Email addresses of all the authors: adrianaalexandru@yahoo.com, dobrerio@ase.ro, ghinararu@incsmps.ro
Number of paper pages: 11
Abstract: The paper aims to investigate the nature of the relationship between unemployment rate(UR) and the size of the U.S.A. shadow economy(SE) measured as % of official GDP for the period 1980-2009, using cointegration and granger causality tests. The size of the shadow economy estimated using the MIMIC model is decreasing over the last two periods, achieving the value of about 7.3% of official GDP at the middle of 2009. The empirical results point out the existence of a long-run relationship between the variables and a unidirectional causation that runs from unemployment rate to shadow economy. We extend the classical Okun's law, in order to estimate the relationship between growth rate of official economy, unemployment rate and the size of the shadow economy. The results reveal a significant direct relationship between shadow economy and the unemployment rate and an indirect relation between shadow economy and growth of official sector.
Keywords: shadow economy, unemployment rate, MIMIC model, Johansen approach, VECM, Granger causality, Okun law.
EXTENSION of the file: .doc
Special (Invited) Session: Revisiting the relationship between unemployment rate and the size of the shadow economy for United States using Johansen approach for cointegration
Organizer of the Session: 632-235
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