Shadow Economy, Transaction Sector, and Economic Convergence: Evidence from a Global Panel of Countries

This study examines GDP per capita convergence by adjusting the official data by the size of the shadow economy and the transaction sector. The findings demonstrate the reduction of income per capita absolute distance from the relevant benchmarks and smaller income per capita dispersion in a global...

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Bibliographic Details
Published in:Seoul journal of economics 2022-01, Vol.35 (4), p.359-402
Main Authors: Trofimov, Ivan D, Sharaan, Ahmed
Format: Article
Language:English
Subjects:
Accounting
Clubs
Convergence
Costs
Economic activity
Economic growth
GDP
Gross Domestic Product
Informal economy
Market economies
Mobility
Per capita
Productivity
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Summary:This study examines GDP per capita convergence by adjusting the official data by the size of the shadow economy and the transaction sector. The findings demonstrate the reduction of income per capita absolute distance from the relevant benchmarks and smaller income per capita dispersion in a global panel and sub-groups. The intra-distributional mobility of economies and the gamma convergence were absent. The stochastic convergence was observed in all specifications, both vis-å-vis the world average or the high-income economies. With regard to club convergence, the stability of the relative transition paths and the club composition were indicated (hence, little convergence across the clubs and more substantial convergence within the clubs).
ISSN:1225-0279
DOI:10.22904/sje.2022.35.4.002