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Leandro Medina, Mr. Andrew W Jonelis, and Mehmet Cangul
The multiple indicator-multiple cause (MIMIC) method is a well-established tool for measuring informal economic activity. However, it has been criticized because GDP is used both as a cause and indicator variable. To address this issue, this paper applies for the first time the light intensity approach (instead of GDP). It also uses the Predictive Mean Matching (PMM) method to estimate the size of the informal economy for Sub-Saharan African countries over 24 years. Results suggest that informal economy in Sub-Saharan Africa remains among the largest in the world, although this share has been very gradually declining. It also finds significant heterogeneity, with informality ranging from a low of 20 to 25 percent in Mauritius, South Africa and Namibia to a high of 50 to 65 percent in Benin, Tanzania and Nigeria.
Mr. Gabriel Quiros-Romero, Mr. Thomas F Alexander, and Ms. Jennifer Ribarsky
This paper proposes a framework for measuring the informal economy that is consistent with internationally agreed concepts and methodology for measuring GDP. Based on the proposed framework, the informal economy “comprises production of informal sector units, production of goods for own final use, production of domestic workers, and production generated by informal employment in formal enterprises.” This proposed framework will facilitate preparation of estimates of the informal economy as a component of GDP.
Mr. Gabriel Quiros-Romero, Mr. Thomas F Alexander, and Ms. Jennifer Ribarsky

evasion not only in micro-firms but also in larger firms. Since informal economy activities are generally small and not registered, statistical agencies face major difficulties in measuring economic activity associated with informality. 5. Improving the measurement of the informal economy can make policies better targeted and more effective. Since informal activity is unregistered and may fall below the regulation and taxation thresholds, economic policies at large may not fully attain their intended effect. While there has long been interest in monitoring and

Leandro Medina, Mr. Andrew W Jonelis, and Mehmet Cangul

activity. Using findings that indicate the electricity-overall GDP elasticity is close to one, these authors suggest using the difference between growth of electricity consumption and growth of official GDP as a proxy for the growth of the informal economy. This method is simple and appealing, but has many drawbacks, including: (i) not all informal economy activities require a considerable amount of electricity (e.g. personal services) or the use of other energy sources (like coal, gas, etc.), hence only part of the informal economy growth is captured; and (ii) the

International Monetary Fund

to provide adequate incentives for staff to take on additional responsibilities. 38 This assumes that 2 percent of the measured annual economic growth over the next 6 years is recognition of informal economy activity, and that payroll taxes are cut by one eighth. 39 The experience in the Czech Republic suggests that this may also curtail informal payments. See World Bank (2002) . 40 See World Bank (2003) . 41 In mid-September, the authorities announced that pensions would be lifted to the subsistence level of Hrv 284 per month. This

Guillermo Javier Vuletin

as a proxy for the growth of the informal economy. This method is simple and appealing, but has many drawbacks, including: (i) not all informal economy activities require a considerable amount of electricity (e.g. personal services) or use other energy sources (like coal, gas, etc.), hence only part of the informal economy growth is captured; and (ii) the electricity-overall GDP elasticity might significantly vary across countries and over time. Transaction approach : 9 Using Fischer’s quantity equation, Money*Velocity = Prices*Transactions , and assuming that

Céline Allard

authors suggest using the difference between growth of electricity consumption and growth of official GDP as a proxy for the growth of the informal economy. This method is simple and appealing, but has many drawbacks, including that (1) not all informal economy activities require a considerable amount of electricity (for example, personal services) or the use of other energy sources (for example, coal, gas), hence only part of the informal economy growth is captured; and (2) the electricity-overall GDP elasticity might vary significantly across countries and over time

Guillermo Javier Vuletin
This paper estimates the size of the informal economy for 32 mainly Latin American and Caribbean countries in the early 2000s. Using a structural equation modeling approach, we find that a stringent tax system and regulatory environment, higher inflation, and dominance of the agriculture sector are key factors in determining the size of the informal economy. The results also confirm that a higher degree of informality reduces labor unionization, the number of contributors to social security schemes, and enrollment rates in education.
International Monetary Fund
This Selected Issues paper presents a snapshot of some economic issues for Ukraine. It analyzes risks for the banking sector stability. It investigates Ukraine’s real equilibrium exchange rate, drawing chiefly from cross-country panel-data analysis, and the experience of other neighboring East-European countries. The results suggest that Ukraine will likely experience significant upward pressure on the real exchange rate, particularly as it orients itself to the European Union. The paper also uses newly available data to give a broad overview of Ukraine’s asset and liability position vis-à-vis the rest of the world.