From time to time I find in the news reports that state that x% of the economy of a country, region, etc, is shadow economy. If that money is not reported by definition, how can experts calculate the size of the shadow economy?
In: Economics
The money involved in that shadow economy has to interact with the rest of the economy at some point, which forces it to come to light. If I pay my builder under the table, he still needs to pay for his groceries. If I pay a drug dealer for drugs, that’s money that’s gone from my bank account, but hasn’t shown up in any other legitimate business’s bank.
This sort of accounting discrepancy doesn’t always allow you to point your finger at somebody and say “this specific person is doing something illegal”, but it does allow you to say “all this money vanishing and reappearing was doing something in the shadow economy for a while”.
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