An Index of the Underground Economy in Malta§

Abstract

The paper constructs an index of underground economic activity in Malta for the years 1971 and 1997. This is not an attempt to estimate the absolute size of underground activity in Malta, since this approach would have encountered technical and conceptual difficulties. To arrive at the results, the paper uses a structural “multiple indicator / multiple cause” (MIMIC) methodology yielding a weighted index of the phenomenon. According to the obtained estimates, underground activity in Malta tripled in magnitude during the reviewed period, although increasing at a decreasing rate. Furthermore, the paper attempts a preliminary analysis on the relationship between the estimated changes in underground activity and the actual fluctuations in official real GNP.

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Cite this paper

@inproceedings{CassarBank2001AnIO, title={An Index of the Underground Economy in Malta§}, author={Alan CassarBank and Alan Cassar and Aaron George Grech}, year={2001} }