The Pakistan Development Review

34 : 4 Part II (Winter 1995) pp. 791807

Estimation of the Black Economy of Pakistan

through the Monetary Approach
MEHNAZ AHMED and QAZI MASOOD AHMED
1. INTRODUCTION
In the recent years the black economy has held immense attraction for
academics as well as policy-makers. This is because the presence of the black economy
is responsible for distortions in the official estimates of macro-economic variables like
income generation, employment, rate of inflation, etc., and thus the possible effect on the
economic policies cannot be ascertained properly. It, therefore, becomes imperative to
investigate this area of research.
Researchers have defined the underground economy in alternative ways. The
underground economy defined by varied names like black, shadow, hidden, informal,
clandestine, second, parallel economy has been divided in four categories for the use of a
standard basis of classification [Feige (1990)].
(a) The Illegal Economy
It consists of income produced by those form of economic activities which are
anti-social in nature, through violation of legal statutes. The most prominent of all
activities in this type of underground economy is drug trafficking. The production of
drugs provides a huge sum of money which competes with the production of other
crops. Besides this, it includes smuggling of various goods and currency, prostitution,
etc.
(b) The Unreported Economy
Governments all around the world forfeit enormous amount of revenues through
uncollected taxes. This is due to the presence of the unreported economy, operating side
by side with the official economy. The unreported economy or the black economy
comprises those activities that circumvent or evade the payment of taxes, breaking the
fiscal rules. It includes income which should be reported to the authorities but is not. The
size and growth of black economy adversely affects various economic and tax reform
policies, the budget deficit, and debt burden, etc.
Mehnaz Ahmed is based at the Sustainable Development Policy Institute, Islamabad. Qazi
Masood Ahmed is based at the Applied Economics Research Centre, University of Karachi.

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Research conducted in this area suggests that there should be simplification of tax
laws, lowering of tax rates, and broadening of the tax base and lowering of the
administrative cost of the efficiency system.
(c) The Unrecorded Economy
This type of the underground economy includes those activities which are
concerned with the problems relating to the rules and regulations of the reporting
requirements of statistical agencies. It includes that income which should be recorded in
the national accounts but is not included. The unrecorded income is the difference
between the actual amount or output and the amount measured by the statistical system.
The current method of assessing the gross national product is not satisfactory as it
does not cover all the economic activities of the economy. Important elements escape the
measurement of these macro-economic instruments. Similarly, if the correct
measurement of labour is made and those operating in the hidden economy are taken
into account, then it would give the right direction to the government in designing
policies for unemployment. Planning the gross national product of any country and its
pace of growth, the level of inflation and unemployment, formulation of a policy for
income and wages, etc., all require decisions to be made on the basis of available data.
With the unreliability of the data known, the social welfare policies and other targets set
by the government can be disappointing.
One of the most important elements of this income is household production
which is not included in the national accounts due to the difficulties encountered in its
measurement. In this way, the unrecorded economy biases the estimates of the variables
like unemployment rates, savings rates, etc.
(d) The Informal Economy
It comprises those activities that entail a cost but are excluded from the benefits
and rights of the formal activities. They may emerge as informal housing, informal
transport, informal industrial sector, etc. These activities are illegal in nature but are not
anti-social like drug trade, smuggling, etc. De Soto (1989) studied the informal economy
of Peru and confined his analysis to the informal sector in urban areas only, whereas
informality also prevails in the rural areas. Policy actions can have significant positive or
negative impacts on the activity of the informals, because the emergence of the informal
sector is mainly due to the laws and regulations passed in the interest of the privileged
lite of the country.
It is imperative to study the black economy. Research can prove its existence, its
quantification according to the information available, and it can describe its patterns of
behaviour and explain the reasons for its growth. Such work will be useful to the policymakers as it will provide guidelines about the potential of the economy to generate
resources that escape ordinary measurement.

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793

Much research has been carried out for estimation of the black economy in
developed countries, but this area yet remains to be explored in the context of
developing countries. In the case of Pakistan, rough estimates of the black economy are
obtained from the reports of the National Taxation Reform Commission, which are
based on mere deductions derived from the possible indications available. It is in this
background that the present study attempts to carry out a comprehensive and
sophisticated analysis to estimate the black economy of Pakistan.
In the light of the discussion above, we have estimated the black economy that
falls in the category of unreported economy, which can be defined as comprising those
activities which are disguised from the tax authorities with a view to evading the
payment of taxes. Our study has attempted to measure the black economy by replicating,
with some modifications, Vito Tanzis method, as this method is considered to be the
most refined work done in the area of monetary analysis so far and was originally
applied to the black economy of the USA.
The paper is organised as follows: Section 2 reviews the literature, Section 3
explores the methodology, Section 4 explains the empirical results, and Section 5 gives
the conclusion.
2. REVIEW OF LITERATURE
Explained below are the monetary methods by which researchers have measured
the size of the black economy so far.
(i) The Gutmann Method
Gutmann (1977) estimated the underground economy of United States in 1974
and gave a provocative estimate of $ 200 billion. His analysis is based on four key
assumptions:
(i) The medium of exchange in the underground economy is mainly based on
currency.
(ii) The activities in the underground economy are the consequences of high taxes
and government-imposed restrictions.
(iii) The ratio of currency to demand deposits is influenced only by the changes in
taxation and other restrictions imposed by the government since 193741 and
by nothing else.
(iv) The period of 193741 was the one in which there was no underground
economy and is termed as the benchmark period.
With these assumptions, he calculated the hidden economy by first calculating
the ratio of currency to demand deposits for the benchmark period of 193741 and then
estimated the currency to demand deposits of 1976. He assumed that the level of
demand deposits was normal and then calculated the extra currency attributable to the
existence of the black economy by taking the difference between the ratios of currency

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to demand deposits of 1976 to the benchmark period. The extra currency was then
multiplied by the ratio of legal GNP to legal money (excluding extra currency). The
result gave the extent of the black economy.
The approach is criticised on the basis of the assumptions by Feige (1979), as
follows:
According to Feige, Gutmanns first assumption is unrealistic since most of the
black money is transferred aboard and is then brought in the country by creation of loans
for the business. This, in turn, requires demand deposits, which affect the ratio of
currency to demand deposits. It is also probable that irregular purchases can take place
by cheque, with little risk of detection.
Gutmanns third assumption is criticised because the ratio of currency to demand
deposits changes over time due to various factors, as it is also suggested by Philip
Cagen, like the volume of retail sales, urbanisation, trade, bank failures, cost of holding
currency and demand deposits. Tanzi (1981) has stressed the fact that Gutmanns strong
case turns weak if the price changes are taken into account. Thus, once the price changes
are adjusted, the per capita currency holding shows a decline. Gutmann had not taken
account of that. Besides, if the benchmark period is changed, then the results would
vary. In this way, the results become sensitive to the choice of the initial period.
It has been observed that the increase in the ratio of currency to demand deposits
is due to a greater fall in the demand deposits than to an increase in currency. Given the
case with which deposits could be transferred between demand and time, it is seen, in the
context of the United States, on which Gutmanns study is based, that many depositors
have decreased the holding of demand deposits and have increased that of time deposits
on which interest can be earned.
The third assumption is questionable because the ratio of currency to demand
deposits had also changed over time due to the change in the composition of currency in
circulation, the reason being that a great part of the currency, i.e., dollar bills, are held
outside the country (United States). The explanation for this behaviour of currency,
especially the $ 100 bills, is: First, in some countries like Panama, Liberia, etc.,
American currency circulates as freely as local currency. Second, foreign trades creates
an increase in the demand for large denomination bills, and foreign travel has increased
to a great extent in the last few years. Third, the increase in oil revenue accruing to the
Middle East is in the forms of dollars. Fourth, countries in which imports are restricted
have, in recent years, introduced import systems where importers are given import
permits to import goods by the use of foreign currency, especially dollars. Fifth, some
countries have introduced duty-free zones where by goods are sold duty-free only if the
payments are made in foreign currency, which again means dollars. Sixth, large incomes
desired from illegal activities, such as drugs, are usually converted in large bills which
are smuggled out of the country. Finally, the high rate of inflation in most countries has
led to currency substitution, i.e., dollars are replaced often by domestic currency.

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795

(ii) The Feige Method

According to Feige (1979) the total transactions in the economy can be measured
by adding the volume of cheque transactions (demand deposits times the average
turnover of these deposits) to the volume of currency transactions (currency in
circulation times the average turnover of currency). The volume of checking transactions
can be derived from the knowledge of the stock of the demand deposits and estimates of
the average number of times per year the turnover of the demand deposits. The turnover
rates were available since 1919 for the United State. Currency turnover was obtained by
calculating the total number of times an average unit of currency changes hands before
its quality deteriorates and it is retired from calculation. Robert Laurent has estimated
that during the period of 18901965 the number of physical transfers that a unit of
currency could perform before retirement was approximately 125 turnovers. Feiges
analysis of underground economy for United States is based on the quantitative theory of
money developed by Irving Fisher as:
MV + M 'V ' = PT
Where
M = Currency notes.
M ' = Demand deposits.
V = Velocity of money of the currency notes or the average turnover on the
currency.
V ' = Velocity of money of the demand deposits or the average turnover on the
demand deposits.
P = Composite price index of existing and newly created goods.
T = Physical volume of transaction.
Firstly, Feige determines M, M ' V and V ' and from this he deduces PT. This PT is
then divided by the observed income to GNP, which gives the estimate of the
underground economy. The observed income py is the product of the price index of
newly created goods and services and y is the real income.
Thus if MV is known, PT can be evaluated. In the absence of the underground
economy, the nominal GNP derived should be equal to the officially measured GNP.
Feige had assumed that there was no underground economy in the period of 1939 and
found that the ratio of PT/GNP, estimated to be (10.3), was normal. He then calculated
the GNP for 1976 and 1978. Dividing the results by the 1939 ratio, he derived the
nominal GNP measured indirectly. The difference between the indirectly measured GNP
and the official one in the national accounts gave the estimate of the underground
economy.
Feige himself admits that the calculations that he has done are in need of
refinement:

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1. It is assumed in the analysis that the velocity of official and unofficial sectors
is equal, but if it is larger, then this will make the figure for the underground
economy higher.
2. Recent financial innovations have probably induced a larger number of
transactions between various types of liquid assets. Adjustments of such
increase again would reduce the estimate of the black economy.
3. The barter transactions are not included in the analysis which has led to an
understatement of the hidden economy.
Gutmann (1979) had criticised Feiges analysis, which begins by shedding light
on the total value of economys transactions. This in turn depends on the turnover rates
of demand deposits and of currency, since no details are given in his calculation of
demand deposit turnover rates other than noting that he had eliminated the major
financial centres. Thus it is not possible to carry out his calculations through to their
results.
Then the turnover rates of currency are not known. Feige arrived at the solution to
this problem by adopting the estimate of Laurent which includes the number of physical
transfers that a unit currency could perform before retirement. This estimate is quite
questionable, because Laurent had made an unrealistic assumption that the quality of the
paper in the country has not changed since before World War II. But when Feige
discovered that the quality of paper did in fact change drastically, he doubled Laurents
estimate of the number of physical transfers that currency could perform, which doubled
the currency turnover rates that affect the estimates of the subterranean economy.
Feige assumes that the ratio between the volume of transactions and the GNP
(legal plus subterranean) has remained constant from before World War II to the period
selected. Hence any increase in the ratio of the volume of transactions to the legal GNP
must be due to the uncounted subterranean GNP. This assumption is analogous to the
third assumption made by Gutmann.
Tanzi has laid criticism at Feiges analysis by pointing out the fact that his results
are sensitive to the choice of the initial period. If the period is changed, the analysis will
vary.
(iii) The Tanzi Method
Tanzi (1980; 1983) has refined the estimates of the black economy using the
currency ratio, which in turn is based on an earlier insight of the work done by Cagen
(1958).
Cagen was interested in explaining the long run behaviour of the currency ratio
defined as currency-to-money supply over the period from 1875 to 1955. He identified a
number of factors that were expected to influence this ratio. They are as follows:
1. The opportunity cost of holding currency.

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797

2. Expected real income per capita.

3. The volume of retail trade (cash being more acceptable in retail trade).
4. The volume of travel per capita (cash being more acceptable between
strangers).
5. The degree of urbanisation.
6. The rate of tax on transactions.
The last variable provides the link between the currency ratio and the tax evasion.
According to Cagen (1958, p. 312), some people evade taxes by making as many
transactions as possible with the currency and not reporting to the tax collector. He
therefore postulates a direct positive relation between the income tax rates and the
currency ratio. This hypothesis was confirmed using multiple regression analysis for the
period of 191955. The dependent variable was the ratio of currency to M2 and the
independent variables were:
1. The interest rate paid on bank deposits.
2. Expected real income per capita (based of previous income levels with
exponentially declining weights).
3. The annual percentage of personal income collected for income taxes.
Tanzi (1980) adopted the idea, linking the currency ratio to tax rates, and used it
to derive alternative estimates of the size of the black economy for the USA.
According to Tanzi (1980; 1983), the reason for people to engage in the
underground economy is the existence of taxes. His approach focuses on the
specification of a demand for currency equation to be able to see the change in the tax
level on the demand.
Two assumptions on which his analysis is based are: first, the underground
economy is the consequence of the high taxes; second, currency is basically used to
carry out transactions or for storing wealth. Three different types of tax rates are used in
the analysis. First is the personal income tax to personal income net of transfers; second,
top bracket statutory tax ratio for each year; and third as a proxy for the effective
weighted average rate on interest incomes, which will capture changes in the level of
income taxes over the period. The model subjected to imperial test is as follows:
Ln C/M2 = ao + a1 lnT + a2 ln WS/NI + a3 ln R + a4 ln Y + e

(1)

Where
C/M2
T1
T2
T3
WS/NI

=
=
=
=
=

Ratio of currency holdings to money defined as M2.

Ratio of personal income taxes to personal income net of transfers.
Top bracket statutory tax rate.
Weighted-average rate on interest income.
Ratio of wages and salaries in national income.

Ahmed and Ahmed

798
R
Y
e

= Interest rate.
= Per capita income.
= Error term.

The expected sings for both per capita income and interest rate are negative. This
is because economic development in the country is recognised by per capita income
which is assumed to lead to the replacement of currency by cheques, thus causing a fall
in C/M2. Similarly, interest rate is negatively related because M2 includes time deposits
that offer an attractive rate of return. On the other hand, as the level of taxation rises,
people are motivated to indulge in tax-evading activities that are facilitated by the use of
currencyas the wages are paid in currency, especially of daily workers, and other
types of income like interest payments, profits being paid by cheques. Thus an increase
in wages and salaries will require more currency.
Equation 1 is estimated with each tax variable at a time, and then without taxes of
any kind. The estimate of the underground economy is derived as follows. For each year,
the predicted level of the currency ratio C/M2 can be calculated by using the preceding
regression equations. Then, by keeping the value of M2 fixed, the predicted level of
currency holdings can be calculated as denoted by (C). This is done as follows: if the
dependent variable in Equation 1 is represented by Zt, then:
Zt = ln (C/M2) = ln Ct ln M2
Zt = ln Ct ln M2
This equation is rewritten in terms of Ct.
Ln Ct = Zt + ln M2t
Where ^ shows the value is predicted.
Ct = exp (Zt + ln M2t)
Next, the equation is solved in the same way, assuming that the tax variable is
zero while coefficients of the other variables remain unchanged. The resulting value is
C0. The difference between Ct and C0 shows how much taxes cause people to hold
currency which gives the estimate of the illegal money. The illegal money is multiplied
with the velocity of money to get an estimate of underground economy.
Underground economy = (Ct C0) V
The velocity of money is obtained by first finding the difference between the total
currency; the demand deposits in circulation and estimated illegal money gives legal
money. Dividing the GNP with legal money gives an estimate of the income velocity of
legal money. It is assumed by Tanzi that the velocity of legal money is equal to that of
illegal money. Tanzi (1982) had also estimated the amount of tax evasion in the

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799

economy by multiplying the underground economy by the ratio of taxes actually paid to
measured GNP.
Tanzis approach appears to have a sound base but has two basic flaws. First, he
makes a very strong assumption that currency is used for making transactions and
storing wealth in the underground economy, whereas it is observed that in the black
economy cheques are used for irregular activities and even credit cards have become
institutionalised means of payment for some kinds of illegal services.
Second, it is assumed that velocity of circulation of money in both sectors is the
same as was assumed in Gutmanns case. Various authors like OHiggens have
questioned this assumption. However, one can find arguments a priori in favour of both
lower and higher velocity of circulation in the black economy and it is not clear which, if
either, view is correct.
Third, his assumption that taxes are the sole cause for the movement of resources
from the formal to the black economy is criticised on the grounds that there are other
variables which one would expect to influence the degree of involvement in the black
economy but which have been ignored by Tanzi. For example, there may be penalties
for being caught; the probability of detection; the amount of government regulation of
economic activity; and so on. In spite of these drawbacks, the present analysis focuses
on the replication of Tanzis Method because it is considered to be the most
sophisticated work done in the area of monetary analysis.
(iv) The Currency Denomination Approach
This approach focuses on the assumption that in underground economy bills of
certain denominations are used: in the United States, as proposed by Henry (1976), bills
of $100 and above are to be withdrawn from circulation to analyse the change in the
composition of total currency in circulation. Henry then attempted to measure the size of
the black economy by changing the composition of total currency holdings in
circulation. Furthermore, as the author has argued elsewhere, many $100 bills are
probably being used for transactions or for storing wealth in foreign countries. An
unknown but probably high amount of currency substitution (with US currency
replacing the currencies of many countries) has certainly been taking place over the
years. This substitution or dollarisation is likely to have been significant in countries that
are experiencing a high rate of inflation.
This approach is criticised by Vito Tanzi, who says that due to real growth and
high inflation in the economy the currency holding would change over the years. As
time would pass, large bills will not appear to be as large as before.
Philippe Barthelemy, along with the criticism above, adds that transactions in the
black economy are not only settled by large denominations but also by small ones.
Further, large notes are hoarded in all countries, where small denominations are used for
current transactions. The small denominations infer the large. One might call it the
parody of Greshams Law.

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800

3. METHODOLOGY
Through the monetary approach those activities of the black economy are
estimated that are financed through the use of currency and bearer bonds. Even if the
taxes did not exist, the currency ratio would be affected by illegal and criminal activities:
gambling, narcotics, smuggling, etc., are carried out through the use of currency which
would increase the currency ratio. But the unavailability of the data is an obstacle to
taking them into account. Thus the concentration of the study will be to capture the
extent of black money, through evasion of taxes, in the form of currency and bearer
bond holdings.
As mentioned earlier, the method adopted for the quantification of the black
economy is that of Vito Tanzi, with some modification made in it. The model subject to
empirical test is a double log specification.
Ln C/M2 = 0+1 Ln(1+TAX/GDP)+ 2 Ln INTDP + 3 DUM + e
Where:
C/M2 = Ratio of currency holdings to money supply, where money supply
equals Currency+demand deposits+Time deposits+other deposits.
TAX/GDP = Ratio of total tax revenue to GDP.
INTDP = Interest rate on time deposits.
DUM = Taking the value 1 from 196071.
e = Error term.
The hypothesised sign for the Tax to GDP ratio is positive, because as the level of
taxes rises, people are induced to evade the payment of taxes, which is carried out
through the use of currency. The relationship between the interest rate on time deposits
and the currency ratio is said to be negative. This is due to the fact that a higher interest
rate on time deposits will serve as an attractive incentive for investment. People would
prefer to purchase time deposits rather than keep their money in cash. The rationale for
choosing the dummy is to capture the effects of currency holdings of the former East and
West Pakistan.
In addition to currency ratio, another dependent variable is created, which
includes bearer bonds along with the currency holding. The reason for doing so is that
bearer bonds serve to be a powerful source of carrying out transactions in the black
economy. The bearer bonds were introduced by the government in 1984-85 to attract
the black money for the enhancement of savings and investment in the economy, since
they could be purchased in unlimited amounts without being asked as to where the
money had come from. Thus another equation is estimated:
Ln CURCB = 0 + 1 Ln(1+TAX/GDP)+ 2 Ln INTDP + 3 DUM + e (2)

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801

Where:
CURCB = Ratio of sum of currency holding and cumulative value of bearer bonds
to M2 and cumulative value of bearer bonds, i.e. (CURRENCY +
CUMULATIVE VALUE OF BEARER BONDS/M2 + CUMULATIVE VALUE OF BEARER BONDS).
After the estimations of Equations 1 and 2 through Ordinary Least Square
technique, the analysis of the black economy proceeds as follows.
For each year, the predicted levels of the respective ratios [CM2 & CURCB] are
derived with the tax variable [CM2t & CURCBt] and without the tax variable [CM20 and
CURCB0]. The difference between the tax and without-tax ratios is multiplied by the
total value of M2 for the respective years to obtain the level of illegal money: so illegal
money for the currency ratio each year will be:
Illegal Money = (CM2t CM20) M2
Similarly, for currency bearer bond ratio, it is given by:
Illegal Money = (CURCBt CURCB0) M2
The estimates of illegal money show how much taxes induce people to hold
currency and bearer bonds in the economy. Illegal money is multiplied by the velocity
of money to get the size of the black economy of each year.
Black Economy = IM V
Where:
IM = Illegal Money.
V = Income velocity of money.
The velocity of money in turn is obtained from the ratio of the GNP to legal
money. The legal money is evaluated by taking the difference between the total
currency in circulation and illegal money. An attempt has been made to calculate the tax
evasion in the economy by multiplying the estimates of black economy to ratio of overall
taxes to the GNP.
4. RESULTS
Table 1 shows the results corresponding to Equations 1 and 2. In both cases, it
can be seen that the variable interest rate on time deposits shows that the correct negative
sign has turned out to be significant at 1 percent in the case of currency to M2 ratio and
the currency bearer bond ratio with hypothesised signs. Similarly, the Tax to GDP ratio
is positive in both cases and significant at 1 percent level of significance in

Ahmed and Ahmed

802

Table 1
Regression Results Corresponding to Currency Ratio
and Currency Bearer Bond Ratio
Variable
Designations
1 Intercept
2 INTDP
3 TAX/GDP
4 DUM
R2
DW
F-RATIO
N

Currency Ratio
(CM2)
2.6036
(4.88)**
0.3105
(3.16)***
0.7421
(3.16)***
0.1168
(1.62)*
0.6675
1.7292
16.0541
31

Currency
Bearer Bond Ratio
(CURCB)
2.8860
(4.29)***
0.2576
(2.63)***
0.8293
(2.81)***
0.1606
(1.76)*
0.5454
1.4838
9.9995
31

*** Shows 1 percent significance.

** Shows 5 percent significance.
* Shows 10 percent significance.

Equation 1 and in Equation 2, approving the hypotheses that as the share of tax revenue
to the GDP rises, the use of currency and bearer bonds in the black economy grows.
The variable in both cases has shown significance. The R2 in both cases is reasonably
high and supports the fact that most of the variation in the currency ratio and the
currency-bearer bond ratio is explained by the respective equations. In order to remove
the auto-correlation from the regression results, the technique of auto-regressive moving
averages is used.
After the estimation of these equations, the predicted value of currency holdings
with and without taxes is computed. The velocity of money is multiplied by illegal
currency holding to get the measure of the black economy of Pakistan as shown in
Tables 2 and 3. It is seen that the black economy has been increasing over the number of
years along with the tax evasion but the black economy has shown a fluctuating trend.
The tables reveals that share of black economy was high during the 60s and 80s which
can be attributed to high taxes and regulations imposed by the government. Point to note
is that during the recent years that in late 80s from 198590 the black economy has
started falling mainly because of the lowering of direct taxes (personal income tax and
corporate tax) levied. However, the black economy still stands at about one third of the
GDP according to the currency in circulation to money supply approach of Tanzi.

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When the bearer bonds are also included as a medium of exchange in the share of the
black economy rises to 39 percent.
5. CONCLUSION
The existence of the black economy is a worrisome development for the policymakers. The documented economy is a small proportion of the national economy today.
With the passage of time, the size of the black economy is expanding rapidly. The
quantification of the black economy is important as it will give signals to the policymakers about the potential of the economy to generate resources.
The monetary analysis is focused to estimate the size of the black economy for
196090 through Vito Tanzis approach. It is an effort to see how much of the currency
in circulation along with the bearer bonds is a part of the black economy. It has been
found that the black economy as a percentage of the GDP has shown a fluctuating trend.
The black economy and the level of tax evasion have increased over the number of years
but the black economy as a percentage of the GDP has registered a decline, which is
attributed to the reduction of direct taxes, the exemptions, and the allowances given by
the government.
We estimated that the revenue loss due to the presence of the black economy was
between Rs 40 to Rs 45 billion in 1989-90. This is a sizeable magnitude and indicates
that substantial revenue gains can be realised by reducing the extent of tax evasion in the
economy. In the case of Pakistan, the estimation of the black economy through this
approach is a pioneering effort and we hope that, in the future, researchers will modify
this approach and discover new methods to measure the size of the black economy.
REFERENCES
Feige, Edgar L. (1979) How big is Irregular Economy? Challenge. Nov.-Dec.
Guttman, Peter M. (1977) The Subterranean Economy. Financial Analysts Journal 26
34. Nov-Dec.
Tanzi, Vito (1980) The Underground Economy in the United States: Estimates and
Implications. Banca Nazionale Del Lavaro. (Quarterly Review). Dec.
Tanzi, Vito (1982) A Second (and More Skeptical) Look at the Underground Economy.
In Vito Tanzi (ed) The Underground Economy in the United States and Abroad.
Lexington, MA: Lexington Books.
Tanzi, Vito (1982) Underground Economy and Tax Evasion in the United States:
Estimates and Implications. In Vito Tanzi (ed) The Underground Economy in the
United States and Abroad. Lexington,, MA: Lexington Books.
Tanzi, Vito, (1983) The Underground Economy in the United States: Annual Estimates
19301980. Staff Papers. 3:2 283305.