The Measurement of the Gross Domestic Product affected by the shadow economy

Anna Czapkiewicz; Katarzyna Brzozowska-Rup

doi:https://doi.org/10.59170/stattrans-2024-028

The Measurement of the Gross Domestic Product affected by the shadow economy

Anna Czapkiewicz Department of Applications of Mathematics in Economics, Faculty of Management, AGH University of Science and Technology, Cracow, Poland & Centre for Non-observed Economy Studies, Statistical Office in Kielce, Kielce, Poland ORCID:https://orcid.org/0000-0002-6144-8381 , Katarzyna Brzozowska-Rup Faculty of Management and Computer Modelling, Kielce University of Technology, Kielce, Poland. & Centre for Non-observed Economy Studies, Statistical Office in Kielce, Kielce, Poland ORCID:https://orcid.org/0000-0003-1231-8027 Statistics in Transition new series, vol. 25, 2024, 3, pages: 69-81 Published online: 4 September 2024 https://doi.org/10.59170/stattrans-2024-028 Citation: Czapkiewicz A., Brzozowska-Rup K., 2024. The Measurement of the Gross Domestic Product affected by the shadow economy. Statistics in Transition new series, 25(3), pp. 69-81. https://doi.org/10.59170/stattrans-2024-028

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ABSTRACT

The article presents a method for balancing Gross Domestic Product (GDP) when the measurements of its components are distorted by the existence of the shadow economy. Our proposal to measure GDP is based on a multiple ultrastructural model (MUM), where the explanatory variables are subject to error. We show that the expected value of GDP can be divided into two parts: the first part concerns data related to registered activities and the second part concerns unobserved data which may be partly related to the shadow economy. The empirical analysis is based on the annual data for individual voivodeships in Poland for the years 2000–2019. The data are obtained from the Local Data Bank of Statistics Poland. Two approaches to measuring GDP are considered: from the expenditure side and from the production side. The results show that the unobservable part of the variables necessary to balance GDP on the production side does not exceed 1% of GDP, and on the expenditure side, it mostly reaches about 3% of GDP.

KEYWORDS

measurement error, ultrastructural model, Gross Domestic Product, shadow economy.

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