The Canadian Underground and Measured Economies: Granger Causality Results

14 Pages Posted: 22 Jul 2007 Last revised: 28 Feb 2010

See all articles by David E. A. Giles

David E. A. Giles

University of Victoria - Economics

Lindsay M. Tedds

University of Calgary - Department of Economics

Gugsa Werkneh

University of Victoria

Abstract

Using new time-series data for the size of the Canadian underground economy, the relationship between unreported and measured GDP in that country is examined. Granger causality tests are conducted, with a proper allowance for the non-stationarity of the data. It is found that there is clear evidence of such causality from measured GDP to hidden output, but only very mild evidence of Granger causality in the reverse direction. This result supports similar evidence for New Zealand reported by the first author, and has several interesting policy implications.

Keywords: underground economy, Granger causality, business cycles

JEL Classification: C53, H26

Suggested Citation

Giles, David E. A. and Tedds, Lindsay M. and Werkneh, Gugsa, The Canadian Underground and Measured Economies: Granger Causality Results. Applied Economics, Vol. 34, No. 18, 2002, Available at SSRN: https://ssrn.com/abstract=1002244

David E. A. Giles

University of Victoria - Economics ( email )

Victoria, BC V8W 2Y2
Canada
+1-250-721-8540 (Phone)
+1-250-721-6214 (Fax)

HOME PAGE: http://web.uvic.ca/~dgiles

Lindsay M. Tedds (Contact Author)

University of Calgary - Department of Economics ( email )

University Drive
Calgary, Alberta T2N 1N4
Canada

Gugsa Werkneh

University of Victoria ( email )

3800 Finnerty Rd
Victoria, British Columbia V8P 5C2
Canada

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