Modeling Informal economy in the Republic of Macedonia
Author | Dashmir Asani |
Position | Faculty of Economy, University of Tirana |
Pages | 50-60 |
Vo
l.
5
N
o
.
3
N
ovem
b
er
,
2019
A
cademic Journal o
f
Business,
A
dministration, Law and Social Science
s
II
PCCL Publishin
g
, Graz-
A
ustri
a
I
SSN 2410-391
8
A
cces online at www.ii
p
ccl.or
g
50
M
odeling In
f
ormal econom
y
in the Republic o
f
Macedoni
a
PhD (C.) Dashmir Asan
i
Faculty of
E
conomy,
U
niversity of Tirana
Ab
str
a
ct
I
nformal economy is di cult to be estimated if assumption of modes weren’t fulfi lled. Here
we describe some elements of the calculation in the particular case of the economy where
complex dynamics is accompanied with some lack on the model’s requirements.
I
n our case
study of the Republic of Macedonia, we used to work with very small number of data points
in an acceptable stable regime obtained in [2004, 2016] making use of additional modeling
and calculation tools. Next, a particular variable –remi ances-shows an important e ect in
o
v
e
r
a
ll b
e
h
a
v
io
r
a
nd
i
s
i
ncl
u
d
e
d
i
n
a
n
a
d h
o
c c
a
lc
u
l
a
t
io
n.
A
s r
e
s
u
lt w
e
o
bt
ai
n
e
d th
a
t
i
nf
o
rm
a
l
economy in RM in this interval has reached the highest values of around 38% of GDP at 2010
and decrease toward 30
%
at 2016.
Ke
y
words
:
I
nformal and shadow economy, currency demand approach, taxation policy,
M
I
M
I
C m
o
d
e
l.
I
ntr
oduc
t
io
n
There are de
f
erent views on what is called
I
n
f
ormal econom
y
.
I
n a ver
y
strict language
it is de
fi
ned as
p
art o
f
a countr
y
’s econom
y
that is not registered and there
f
ore it
is o
ciall
y
unknown.
I
n re
f
erences [1], [2] the de
fi
nition o
f
hidden econom
y
as the
unobservable one is reserved onl
y
f
or the
p
art o
f
unregistered econom
y
that is created
a
s result o
f
evading
f
ormal o
cial records to sim
p
l
y
esca
p
e the Taxes’ duties. But
unregistered econom
y
could originate
f
rom criminal activities as well and in [3] it is
detailed this as
p
ect. However, this is ex
p
ected to have di
erent structure.
I
n this case
the accurac
y
o
f
the estimation could be strongl
y
a
ected
f
rom the size o
f
this last.
E
vidences show that obtaining an a
pp
ro
p
riate model and
fi
xing the set
f
or variables
o
f
p
articular models consist in a care
f
ul anal
y
sis o
f
concrete econom
y
under stud
y
as
seen in [5] ,[6] , [7] an man
y
others considerations.
U
suall
y
the calculation techni
q
ue
ca
ll
e
d
t
h
e currenc
y
d
eman
d
a
pp
roac
h
(CD
A
) is consi
d
ere
d
as an a
pp
ro
p
riate mo
d
e
l
giving evidences o
f
relationshi
p
s between in
f
ormal econom
y
ex
p
ressed in in the
mone
y
out o
f
de
p
osits and some variables.
I
n the most sim
p
le e
q
uation it has the
f
ollowing
f
orm:
()
εγβα
+−++=
ttti
t
RTaxGDP
M
C1loglnln
(
1
)
M is narrow
/
broad mone
y
, C the mone
y
in circulation,
Tax is the average tax rate and R is the interest rate
f
or
De
p
osits.
A
not
h
er met
h
o
d
is t
h
e M
I
M
I
C mo
d
e
l
t
h
at
p
ut the in
f
ormal econom
y
in the middle
p
oint between
f
actors and indicators.
I
t looks like the
f
ollowing
:
(
2
)
Where in
I
ndicator
Y
could be
p
laced an
y
η
ε
+
⎟
⎟
⎟
⎟
⎟
⎠
⎞
⎜
⎜
⎜
⎜
⎜
⎝
⎛
Γ=
+Γ=
⎟
⎟
⎠
⎞
⎜
⎜
⎝
⎛
FactorX
CapitaGNI
tUnemplymen
RateTax
InformalGDP
IndicatorY
GDP
_
.
_
.
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