Comment on Measuring the Size of the Shadow Economy Using a Dynamic General Equilibrium Model with Trends
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Manuel A. Gómez is a Full Professor of Mathematical Methods for Economics and Business at the Department of Economics of the University of…
Adrián Ríos-Blanco is a Ph.D. candidate in the Department of Economics at the University of A Coruña (Spain). He received both his B.S. in B…
Abstract
In their 2018 Journal of Macroeconomics article “Measuring the Size of the Shadow Economy Using a Dynamic General Equilibrium Model with Trends,” Mario Solis-Garcia and Yingtong Xie propose a method for measuring the size and dynamics of the shadow economy. We show that the method does not serve its purpose because once correctly implemented it generates a constant ratio of shadow to formal production, which is equal to a base-year estimate taken from an external source.
Response to this article by Mario Solis-Garcia and Yingtong Xie: Response to “Comment on Measuring the Size of the Shadow Economy Using a Dynamic General Equilibrium Model with Trends” (EJW, March 2022).