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Shadow economy: does it matter for money velocity?

Research output: Contribution to Journal/Magazine › Journal article › peer-review

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Shadow economy: does it matter for money velocity? / Onnis, Luisanna; Tirelli, Patrizio.
In: Empirical Economics, Vol. 49, No. 3, 11.2015, p. 839-858.

Research output: Contribution to Journal/Magazine › Journal article › peer-review

Harvard

Onnis, L & Tirelli, P 2015, 'Shadow economy: does it matter for money velocity?', Empirical Economics, vol. 49, no. 3, pp. 839-858. https://doi.org/10.1007/s00181-015-0914-2

APA

Onnis, L., & Tirelli, P. (2015). Shadow economy: does it matter for money velocity? Empirical Economics, 49(3), 839-858. https://doi.org/10.1007/s00181-015-0914-2

Vancouver

Onnis L, Tirelli P. Shadow economy: does it matter for money velocity? Empirical Economics. 2015 Nov;49(3):839-858. Epub 2015 Feb 10. doi: 10.1007/s00181-015-0914-2

Author

Onnis, Luisanna ; Tirelli, Patrizio. / Shadow economy : does it matter for money velocity?. In: Empirical Economics. 2015 ; Vol. 49, No. 3. pp. 839-858.

Bibtex

@article{a5d1ef66c30141629c907dd162ccafea,
title = "Shadow economy: does it matter for money velocity?",
abstract = "The standard approach adopted in the literature exploits data on money demand to extrapolate the dynamics of the unobserved economic activity. In this paper, we explore instead the long-run effects of shadow economy measures—obtained independently from money demand functions—on the velocity of circulation of money. Empirical evidence from a panel covering 43 countries over the period 1981–2005 shows that variations in the relative size of the unrecorded sector have a negative and significant effect on the velocity of circulation of money. This is because, ceteris paribus, the higher the share of the shadow economy, the higher the demand for currency and therefore the lower the velocity of circulation of money. The negative relation between underground economic activity and velocity of circulation of money is robust to the use of different shadow economy estimates, to a sub-sample analysis and to the inclusion of a time trend.",
keywords = "Money velocity, Money demand, Shadow economy, Informal sector",
author = "Luisanna Onnis and Patrizio Tirelli",
year = "2015",
month = nov,
doi = "10.1007/s00181-015-0914-2",
language = "English",
volume = "49",
pages = "839--858",
journal = "Empirical Economics",
issn = "0377-7332",
publisher = "Springer-Verlag",
number = "3",

}

RIS

TY - JOUR

T1 - Shadow economy

T2 - does it matter for money velocity?

AU - Onnis, Luisanna

AU - Tirelli, Patrizio

PY - 2015/11

Y1 - 2015/11

N2 - The standard approach adopted in the literature exploits data on money demand to extrapolate the dynamics of the unobserved economic activity. In this paper, we explore instead the long-run effects of shadow economy measures—obtained independently from money demand functions—on the velocity of circulation of money. Empirical evidence from a panel covering 43 countries over the period 1981–2005 shows that variations in the relative size of the unrecorded sector have a negative and significant effect on the velocity of circulation of money. This is because, ceteris paribus, the higher the share of the shadow economy, the higher the demand for currency and therefore the lower the velocity of circulation of money. The negative relation between underground economic activity and velocity of circulation of money is robust to the use of different shadow economy estimates, to a sub-sample analysis and to the inclusion of a time trend.

AB - The standard approach adopted in the literature exploits data on money demand to extrapolate the dynamics of the unobserved economic activity. In this paper, we explore instead the long-run effects of shadow economy measures—obtained independently from money demand functions—on the velocity of circulation of money. Empirical evidence from a panel covering 43 countries over the period 1981–2005 shows that variations in the relative size of the unrecorded sector have a negative and significant effect on the velocity of circulation of money. This is because, ceteris paribus, the higher the share of the shadow economy, the higher the demand for currency and therefore the lower the velocity of circulation of money. The negative relation between underground economic activity and velocity of circulation of money is robust to the use of different shadow economy estimates, to a sub-sample analysis and to the inclusion of a time trend.

KW - Money velocity

KW - Money demand

KW - Shadow economy

KW - Informal sector

U2 - 10.1007/s00181-015-0914-2

DO - 10.1007/s00181-015-0914-2

M3 - Journal article

VL - 49

SP - 839

EP - 858

JO - Empirical Economics

JF - Empirical Economics

SN - 0377-7332

IS - 3

ER -