Book contents
- Frontmatter
- Contents
- List of contributors
- Preface
- Introduction
- Part I The meaning, measurement, and policy implications of the underground economies
- Part II The underground economy in Western developed nations: measurement in different laboratories
- 5 Monetary perspective on underground economic activity in the United States
- 6 The unrecorded economy and the national income accounts in the Netherlands: a sensitivity analysis
- 7 Assessing the underground economy in the United Kingdom
- 8 The underground economy in the Federal Republic of Germany: a preliminary assessment
- 9 The underground economy in Sweden
- 10 The irregular economy of Italy: a survey of contributions
- 11 The hidden economy in Norway with special emphasis on the hidden labor market
- 12 Canada's underground economy
- 13 The underground economy in France
- Part III The underground economy under central planning
- Bibliography
6 - The unrecorded economy and the national income accounts in the Netherlands: a sensitivity analysis
Published online by Cambridge University Press: 20 October 2009
- Frontmatter
- Contents
- List of contributors
- Preface
- Introduction
- Part I The meaning, measurement, and policy implications of the underground economies
- Part II The underground economy in Western developed nations: measurement in different laboratories
- 5 Monetary perspective on underground economic activity in the United States
- 6 The unrecorded economy and the national income accounts in the Netherlands: a sensitivity analysis
- 7 Assessing the underground economy in the United Kingdom
- 8 The underground economy in the Federal Republic of Germany: a preliminary assessment
- 9 The underground economy in Sweden
- 10 The irregular economy of Italy: a survey of contributions
- 11 The hidden economy in Norway with special emphasis on the hidden labor market
- 12 Canada's underground economy
- 13 The underground economy in France
- Part III The underground economy under central planning
- Bibliography
Summary
During the second half of the 1970's there has been a growing concern about the influence of unrecorded activities and fraud on the economy. This chapter examines the consequences of fraud on the reliability of macroeconomic statistics as a basis for economic policy making.
For policy making one needs statistics. When these statistics are biased because of a large and growing unrecorded sector, policy actions might miss their intended targets and may at times produce adverse macroeconomic effects. Feige and McGee (1988, Chapter 3) give some examples of what might go wrong because of distorted information. Distorted information and its consequences for public policy are also studied by Alford and Feige (1988, Chapter 2). This chapter studies the influence of fraud on macroeconomic statistics, particularly the gross domestic product (GDP). We use the term “fraud” to mean the nonreporting or underreporting of income to the tax authorities. Thus, income generated by illegal activities but known to the tax authorities (as is sometimes the case with prostitution) is not considered as fraud here. The chapter does not investigate what GDP would have been if everybody would have behaved in accordance with the law.
In an investigation of the influence of fraud on macroeconomic statistics it is of great importance that clear terminology is used. Following Heertje and Cohen (1980), the Central Bureau of Statistics (CBS) attaches the adjective “unofficial” to all flows of goods, services, and income that are not included in the national accounts. These flows are regarded as being in the “unofficial circuit.” An understanding of the results of this investigation requires that one understands the difference between fraud and the unofficial circuit.
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- The Underground EconomiesTax Evasion and Information Distortion, pp. 159 - 174Publisher: Cambridge University PressPrint publication year: 1989
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