Comment on Feige's Paper "Reflections on the Meaning and Measurement of Unobserved Economies: What Do We Really Know About the 'Shadow Economy'?

Friedrich Schneider


This comment provides a reply to Prof. Feige’s paper with the title “Reflections on the Meaning and Measurement of Unobserved Economies: What do we really know about the ‘Shadow Economy’?”, in which Prof. Feige heavily criticizes me. I show that the same critique which Prof. Feige raises against me can be put forward to his results on the non-observed economy. Moreover, I show that my dataset is appropriately documented, and I also address the problem of calibration and normalization issues when undertaking a MIMIC estimation. In the concluding section, I suggest that a joint paper should be written in which all the pros and cons of each method of estimating the size and development of the non-observed/shadow economy are presented and criticized.

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