MONETARY APPROACH TO THE MEASUREMENT OF UNRECORDED ECONOMY IN TURKEY

Date

1993

Author

Kasnakoğlu, Zehra

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In this paper, Simple Currency and Demand for Real Currency methods are employed to measure monetary unrecorded income for Turkey during the 1963-90 period. The results of the Simple Currency Method, obtained by using different base years indicate that, the relative size of the unrecorded income in monetary sector changes for different base years, but the trends for different base years are similar. There is a declining trend between 1968-75. After 1981, the monetary unrecorded sector varies between 0.0-16.6 % of the recorded income. The percentages of monetary unrecorded income to GNP are 14.4 and 16.6 for 1989 and 1990, respectively. Estimation of the size of monetary unrecorded economy is based on demand for real currency in the second approach and focuses on unrecorded income due to efforts to evade and avoid taxes. In the estimates based on the minimum tax levels, an increasing trend in unrecorded economy continues up to the 1981. The highest level is reached in 1981, and unrecorded income due to tax evasion varies between 9.6-13.0 %. Then a declining trend continues up to 1987, where the unrecorded economy is between 2.2-3.5 % of the recorded income. In the estimates based on no taxes, size of the hidden economy follows the same trend with higher magnitudes. In 1981, which is the peak year, the percentage of the hidden economy is estimated as 18.0-22.6 % of the recorded income.

URI

https://hdl.handle.net/11511/110412

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Department of Economics, Article