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Leandro Medina and Mr. Friedrich Schneider
We undertake an extended discussion of the latest developments about the existing and new estimation methods of the shadow economy. New results on the shadow economy for 158 countries all over the world are presented over 1991 to 2015. Strengths and weaknesses of these methods are assessed and a critical comparison and evaluation of the methods is carried out. The average size of the shadow economy of the 158 countries over 1991 to 2015 is 31.9 percent. The largest ones are Zimbabwe with 60.6 percent, and Bolivia with 62.3 percent of GDP. The lowest ones are Austria with 8.9 percent, and Switzerland with 7.2 percent. The new methods, especially the new macro method, Currency Demand Approach (CDA) and Multiple Indicators Multiple Causes (MIMIC) in a structured hybrid-model based estimation procedure, are promising approaches from an econometric standpoint, alongside some new micro estimates. These estimations come quite close to others used by statistical offices or based on surveys.
Leandro Medina and Mr. Friedrich Schneider

. Due to these factors from lines (2) to (4) one gets a corrected shadow economy which is roughly two thirds of the macro size of the shadow economy. It is 65 percent for Estonia and 64.2 percent for Germany. In the following, this correction factor is used to calculate an adjusted size of the shadow economy using the MIMIC method. The results for 31 European countries for 2017 are presented in Figure 3.3 . The shadow economy appears considerably smaller and this might be a more realistic value of the actual size of the shadow economy using a macro method. Table

International Monetary Fund

economy activities in Estonia and Germany. Table 1.7 starts with the macro MIMIC estimate, as an average value for 2009 to 2015, of 24.94 percent of GDP for Estonia and 9.37 percent for Germany. Legally bought material for shadow economy or do-it-yourself activities and friends’ help is deducted. Then illegal activities are deducted. Furthermore, do-it-yourself activities and neighbors’ help are deducted. These subtractions yield a corrected shadow economy roughly two-thirds of the macro size of the shadow economy: 65 percent for Estonia and 64.2 percent for Germany