Analysis of Correlations between Economic Growth (Rate of Real GDP) and the Underground Economy

• Main Authors: Pripoaie Silviu, Pripoaie Rodica
• Format: Article
• Language: English
• Published: Danubius University 2009-06-01
• Series: EIRP Proceedings
• Subjects: economic growth; unemployment; inflation; underground economy; fiscal pressure
• Online Access: http://www.proceedings.univ-danubius.ro/index.php/eirp/article/view/504/463

Analysis of performance of any economy involves the measurement and correlation of threebasic elements: the rate of economic growth, the rate of inflation and unemployment rate. When the rateof growth (rate of real GDP) is high, the production of goods and services is growing and thereforeincreasing the number of jobs, decrease unemployment and raise living standards. If the economy is inrecession phase, increasing fiscal pressure to ensure the necessary budgetary funds triggers complexeconomic mechanisms. Rules more strictly is that those who are not able to operate in the normaleconomy to slide towards the underground economy, and this not because he wants to tax evasion, butbecause they simply can not cope with new regulations. It is widely accepted in economic theory andpractice the idea that reliability scale macroeconomic indicators of a country is affected by size ofunderground economy and the various tests made so far on this subject, focusing either on the socialaspect or the economic or moral, or emphasizes the illegal or the edge of legality. This has led to variousstudies in this area do not provide comparable data or provide data to the contrary. Worldwide were putin place, however, some calculation methods provided that applied the same country and same period,the results are rarely consistent, sometimes even in fundamentally different.