## Explaining the Shadow Economy in Europe: Size, Causes and Policy Options

_IMF Working Papers, December 13, 2019_

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## Bibliographic details
- Authors: Ben Kelmanson, Koralai Kirabaeva, Leandro Medina, Jason Weiss
- Published: December 13, 2019
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513520698.001

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### Summary and scope
- Examines drivers and reestimates the size of shadow economies in Europe, with a focus on the emerging economies.
- Argues that a comprehensive package of reforms, focused on country-specific drivers, is needed to successfully combat the shadow economy.
- Emphasizes policies to increase formality across a menu tailored to Europe’s emerging economies.

### Key findings on size and trends
- The size of shadow economies declined across Europe in recent years but remains significant, especially in Eastern Europe.

### Determinants in emerging European economies
- The key determinants of shadow economy size identified are:
  - regulatory quality
  - government effectiveness
  - human capital

### Policy recommendations and menu of reforms
- A comprehensive, country-specific package of reforms is recommended.
- The menu of policies most relevant for Europe’s emerging economies includes:
  - reducing regulatory and administrative burdens
  - promoting transparency and improving government effectiveness
  - improving tax compliance
  - automating procedures
  - promoting electronic payments

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## Content in this bundle

- **Working Paper**
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_Source: https://www.imf.org/en/publications/wp/issues/2019/12/13/explaining-the-shadow-economy-in-europe-size-causes-and-policy-options-48821_