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Transactions: INTERNATIONAL JOURNAL of MATHEMATICAL MODELS AND METHODS IN APPLIED SCIENCES
Transactions ID Number: 20-744
Full Name: Adriana AnaMaria Alexandru
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Age: ON
Sex: Female
Address: 6-8 Povernei Street, 010643, Bucharest, Romania
Country: ROMANIA
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E-mail address: adrianaalexandru@yahoo.com
Other E-mails: adrianaalexandru83@gmail.com
Title of the Paper: Unemployment rate and U.S. shadow economy: an analysis based on spline models
Authors as they appear in the Paper: Adriana AnaMaria Alexandru
Email addresses of all the authors: adrianaalexandru@yahoo.com
Number of paper pages: 10
Abstract: The paper aims to investigate the relationship between unemployment rate and shadow economy with USA data using spline models. The shadow economy is estimated as percentage of official GDP, using MIMIC model. 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).The size of the shadow economy (SE) is estimated to be decreasing over the last two decades. In order to evaluate the nature of the relationship between the two variables, we have estimated cubic B-spline, natural cubic B-spline and smoothing models.Using an F-test, we compare the smoothing spline to a global linear fit and the results indicate a sufficiently linear relationship. Finally, we have compared the local polynomial models with the spline model; !
the smoothing spline model closely matches the linearity between the size of the shadow economy and the unemployment rate. We extend the classical 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 models, spline models, Okun law, U.SA.
EXTENSION of the file: .doc
Special (Invited) Session: The relationship between unemployment rate and the size of the shadow economy- A nonparametric analysis of U.S. data with spline models
Organizer of the Session: 662-161
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