Abstract:

Regarding the estimation of the size of the shadow economy, which is defined as all activities not known by the state, it has been observed that various approaches have been developed in academia. As a result of the problem of shadow economy’s multidimensionality and its different forms in each country, each approach is based on various assumptions. This study aims to estimate the size of the shadow economy for the period 1985-2021 by using Monetary (Fixed) Ratio Method, accepted as monetarist approach. In addition, by applying the Moving Average Method, the effect of sharp breaks that may occur between data series during periods of stable economic conditions is reduced. According to the results, the share of the shadow economy varies between 17.14% and 20.84%. The analysis reveals that the share of the shadow economy in GDP experienced severe fluctuations between 1985 and 2008. With the effect of the global economic crisis that started in the financial sector in the USA, Turkey faced the highest share of the shadow economy in recent periods in 2008According to the study, it is understood that the effect of the global economic crisis continued into 2009-2010. In the following years, its effect decreased, and the share of the shadow economy decreased to 20.84% in 2021. The findings indicate that shadow economy activities have an increasing tendency during periods of economic crisis.

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