The USA Shadow Economy and the Unemployment Rate: Granger Causality Results

Ion DOBRE
Adriana AnaMaria ALEXANDRU
Octavia LEPAS

Keywords

shadow economy, unemployment rate, Granger causality

Abstract

Using the time series data for USA shadow economy (SE), we examine the relationship between the size of unreported economy estimated as percentage of official GDP and the unemployment rate (UR). Granger causality tests are conducted, with a proper allowance for the non-stationarity of the data. The results indicate a clearly evidence of such causality from the unemployment rate to shadow economy.