150 likes | 154 Views
THE SIZE AND DETERMINANTS OF THE UNOFFICIAL ECONOMY IN CROATIA. Prepared by Davor Mikulić Zagreb , Semptember 201 5. Scope of the paper. Overview of unofficial economy estimates in Croatia and new member states (NMS) Exhaustiveness of national accounts results
E N D
THE SIZE AND DETERMINANTS OF THE UNOFFICIAL ECONOMY IN CROATIA Prepared by DavorMikulić Zagreb, Semptember2015
Scopeofthepaper Overviewofunofficialeconomyestimatesin Croatia andnewmemberstates (NMS) Exhaustivenessof national accountsresults MIMIC approachestimates Identificationof UE determinants
Non-exhaustivenesstypes (national accoutsapproach): N1 – Deliberately non-registered (underground ) N2–Illegal producers N3 – Not required to register N4 – Legal persons not surveyed N5 – Registered entrepreneurs not surveyed N6 – Producers deliberately misreporting N7 – Other statistical deficiencies
MIMIC approach (Schneider) Structural model: determine the relationship between an unobservable variable (unofficial economy)and a set of indicators related to UE Indicators: GDP, money incirculation, participation rate Causes: size of government, share of direct taxation, fiscal freedom, business freedom, unemployment rate, government effectiveness
Econometrictestsofdeterminantsof UE in new memberstates Depedentvariable: UE NOE (model 1) and UE MIMIC (model 2) Period: 2000-2011 Panel data – fixedeffects yi,t =α +βXi,t + ei,t (1)
Determinants of the unofficialeconomyineconomic literature Burdens on the official economy; Public sector services; Tax morality and government controls; Labour market conditions; Structural factors.
Causes of unofficial economy in new EU member states and Croatia
CONCLUDING REMARKS • Significantdifferencesin UE in NMS • Exhaustivenessof national accountsresultsinlowerestimateofunofficialeconomyincomparison to MIMIC • Lowervariabilityin MIMIC estimates for individualcountries • Government expenses, as broadest indicator of costs government posed to the official economic units, turned to be more significant than revenues • Improvementinoveralinstitutionalframeworkreducestheshareofunofficialeconomy • Official and the unofficial economy in NMS are substitutes not complements • Impactofeconomicfreedom is unclear