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Revised estimates of the Underground Economy: Implications of US Currency held abroad

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  • Feige, Edgar L.
Abstract
The paper reexamines the strengths and weakness of all direct and indirect methods of estimating the amount of US currency held abroad and concludes that between 25% -45% of US currency is held abroad. This result stands in sharp contrast to the widely cited estimates presented by Porter and Judson (1996) who claim that between 55% -70% of US currency is held abroad. The new estimates of currency held abroad are used to derive a domestic currency series which is then employed in a conventional currency ratio model to estimate the size and growth of the unreported economy in the US between 1973 and 1994.

Suggested Citation

  • Feige, Edgar L., 1997. "Revised estimates of the Underground Economy: Implications of US Currency held abroad," MPRA Paper 13805, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:13805
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    References listed on IDEAS

    as
    1. Flint Brayton & Gregory D. Hess & David H. Small, 1993. "Nominal income targeting with the monetary base as instrument: an evaluation of McCallum's rule," Proceedings, Board of Governors of the Federal Reserve System (U.S.).
    2. Philip Cagan, 1958. "The Demand for Currency Relative to Total Money Supply," NBER Chapters, in: The Demand for Currency Relative to Total Money Supply, pages 1-37, National Bureau of Economic Research, Inc.
    3. Feige,Edgar L. (ed.), 1989. "The Underground Economies," Cambridge Books, Cambridge University Press, number 9780521262309.
    4. Susan Pozo (ed.), 1996. "Exploring the Underground Economy," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number eue, December.
    5. Laurent, Robert D, 1974. "Currency in Circulation and the Real Value of Notes," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 6(2), pages 213-226, May.
    6. Mr. Russell C Krueger & Mr. Jiming Ha, 1995. "Measurement of Co-Circulation of Currencies," IMF Working Papers 1995/034, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Underground Economy; Unreported Economy; Unrecorded Economy; Currency Abroad; Shadow Economy; Tax gap; Location of US Currency;
    All these keywords.

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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