An Analysis of The Shadow Economy in Malta: A Currency Demand and MIMIC Model Approach

The paper applies two commonly used methods in the literature to estimate shadow economy Malta, Currency Demand Approach and Multiple Indicator Causes (MIMIC) model. Given unobservable nature of economy, estimates are surrounded by a considerable degree uncertainty. While these differ somewhat on historical evolution size Maltese which turn can be traced back their different underlying assumptions, both suggest that it has remained relatively stable over last decade, standing at just below 21% official GDP 2019. Where possible, compared other studies same subject where we find dynamic properties our variable follow those found literature.