The following information was submitted:
Transactions: INTERNATIONAL JOURNAL of MATHEMATICAL MODELS AND METHODS IN APPLIED SCIENCES
Transactions ID Number: 19-757
Full Name: Adriana AnaMaria Alexandru
Position: Ph.D. Candidate
Age: ON
Sex: Female
Address: Piaþa Romanã nr.6, sector1, 010374
Country: ROMANIA
Tel: 0040723374735
Tel prefix: 0040
Fax:
E-mail address: adrianaalexandru@yahoo.com
Other E-mails: adrianaalexandru83@gmail.com
Title of the Paper: A SVAR approach of the relationship between shadow economy and unemployment rate: The case of United States
Authors as they appear in the Paper: Adriana AnaMaria Alexandru, Ion Dobre, Catalin Corneliu Ghinararu
Email addresses of all the authors: adrianaalexandru@yahoo.com, dobrerio@ase.ro, ghinararu@incsmps.ro
Number of paper pages: 10
Abstract: The paper analyses the relationship between shadow economy and unemployment rate using a Structural VAR approach for quarterly data during the period 1980-2009. The size of the shadow economy as % of official GDP is estimated using a MIMIC model with four causal variables(taxes on corporate income, contributions for government social insurance, unemployment rate and self-employment) and two indicators (index of real GDP and civilian labour force participation rate). Their dimension is decreasing over the last two periods. The relationship between the two variables is further tested by imposing a long-run restriction in the Structural VAR model to analyze the impact of the shadow economy to a temporary shock in unemployment. The impulse response function generated by the Structural VAR confirms that in the short-run, a rise in the unemployment rate in formal sector will lead to an increase in the number of people who work in the shadow economy. We extend the classic!
al Okun 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, SVAR approach, Okun law
EXTENSION of the file: .doc
Special (Invited) Session: The relationship between shadow economy and unemployment rate: A SVAR approach
Organizer of the Session: 648-169
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