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The paper aims to estimate the size of shadow economy (SE) and tax evasion (TE) in Romania for the period 2000–2017. We apply different approaches – Multiple Indicator Multiple Cause (MIMIC) model for the estimation of the size of the SE and the currency demand approach for the estimation of TE – in order to lay emphasis on peculiarities of these two phenomena. Empirical analysis reveals that SE acts as a substitute to formal economy while tax evasion is complement to GDP. Policy implications are that, given the different causes behind these two phenomena, the importance and consequences of SE and TE change over business cycle and they require different policy measures. [ABSTRACT FROM AUTHOR]

The paper aims to analyze the unidirectional relationship from active ageing phenomena to the size of the Romanian shadow economy in order to see if the unofficial sector represents a social buffer for older workers who have lower labor market opportunities. In order to do that, we applied two important causality analyses, Granger and Toda-Yamamoto, based on quarterly data over the period 2000-2010. The size of the Romanian shadow economy was previously estimated using a revised version of the currency demand approach based on autoregressive distributed lag (ARDL) approach. For active ageing, the employment rate for older workers was used as proxy. The cointegration empirical results highlight the existence of a positive long-run relationship between employment rate of elderly and unofficial sector. The empirical causality results conclude that there is a unidirectional Granger causality that runs from employment rate of older workers to shadow economy both on long-run and short-run. The empirical results of Toda-Yamamoto revealed the absence of a short-run causal relationship from employment rate for older workers to the size of shadow economy. One possible explanation for the existence of a positive relationship that runs from employment rate of elderly to unofficial sector can be the low capacity of the economy to generate proper jobs, so this age group of older workers does not have qualifications that meet the needs of formal economy, and therefore shadow economy becomes an alternative to formal work and it may provide a buffer for some workers who have few alternative labor market opportunities. Another alternative could be the fact that this age group of elderly remains occupied in the formal lab our market, but with low earnings and they work in informal activities in order to supplement their income. [ABSTRACT FROM AUTHOR]

The paper aims to investigate the nature of the relationship between the shadow economy (SE) and recorded GDP for the case of Romania using Pesaran et al.(2001) bounds tests approach for cointegration for the period 2000-2010. The size of Romanian shadow economy is estimated using a revised version of the currency demand approach based on autoregressive distributed lag (ARDL) approach to cointegration analysis. To investigate the long-run causal linkages and short-run dynamics between shadow economy and recorded GDP, ARDL cointegration approach is applied. The ARDL causality results revealed only the existence of a long-run unidirectional causality that runs from shadow economy official economy, revealing a negative relationship betwwen them on long-run. In addition, the CUSUM and CUSUMSQ tests confirm the stability of causal relationships. [ABSTRACT FROM AUTHOR]

Official economic situation plays a crucial role in people's decision to work or not in the informal sector. In a booming official economy, people have a lot of opportunities to earn a good salary and even extra money. This is not the case of an economy in recession, when people try to compensate the loss of income from formal economy through involvement in the informal economy. The paper aims to evaluate the relationship between official economy and shadow economy for the case of Romania using quarterly data covering the period 20000Q1-2013Q4.In order to do that, a structural vector autoregressive approach(SVAR) was used. The relationship between the two variables is tested by imposing a long-run restriction in the Structural VAR model to analyze the effect in the size of Romanian shadow economy to a temporary shock in real GDP. The impulse response function generated by the Structural VAR confirms that in the short-run, a rise in the official economy will lead to a decrease in the size of the shadow economy. [ABSTRACT FROM AUTHOR]

The paper analyses the relationship between shadow economy and unemployment rates using a Structural VAR approach for quarterly data during the period 2000-2010. The size of Romanian shadow economy is estimated using the currency demand approach based on VECM models, stating that its size is decreasing over the analyzed period, from 36.5% at the end of 2000 to about 31.5% of real GDP at the middle of 2010. The relationship between the variables is 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 accumulated responses generated by a positive supply shock (unemployment rate) confirms that in the short-run, a rise in both registered and ILO unemployment rates in formal sector will lead to a decrease in the number of people who work in the shadow economy in the second quarter following the initial shock and to an smaller increase in the size of the Romanian shadow economy in the third quarter following the initial shock. [ABSTRACT FROM AUTHOR]