Advances in Management and Applied Economics

The Portuguese Non-Observed Economy

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  • Abstract

    This paper aims to contribute to a better understanding of the volume of the Non- Observed Economy (NOE) in Portugal, by estimating, based on MIMIC models (multiple indicators multiple causes), its path in the period 1977-2008. On the one hand, given the influence of the tax burden, the burden of regulation and the evolution of the labour market, and on the other hand its impact on monetary, labour market and production indicators, it is estimated that the weight of NOE as a percentage of official GDP in Portugal has grown from 19% in 1977 to 23% in 2008. In particular, it is observed that after a fall in the period 1977-1982, the NOE showed an upward trend in the subsequent period, which has stabilized at around 21% since 1994. However, from the end of 2007, there has again been an increase. Finally, results show that the growth of NOE in Portugal tends positively to affect the growth of the official economy.