Resum:
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Based on the Ahumada et al. (2007, Review of Income and Wealth) critique we
revise existing estimates of the size of the German underground economy. Among other
things, it turns out that most of these estimates are untenable and that the tax pressure induced
size of the German underground economy may be much lower than previously thought. To
this extent, German policy and law makers have been misguided during the last three decades.
Therefore, we introduce the Modified-Cash-Deposit-Ratio (MCDR) approach, which is not
subject to the recent critique and apply it to Germany for the period 1960 to 2008.
JEL: O17, Q41, C22, Keywords: underground economy, shadow economy, cash-depositratio,
currency demand approach, MIMIC approach |