An autonomous research institute under the Ministry of Finance


Estimation of Unaccounted Income Using Transport as a Universal Input: A Methodological Note

Publication date

Apr, 2015


NIPFP Working Paper No. 146


Sacchidananda Mukherjee and R. Kavita Rao


There has been a lot of interest in understanding and measuring the size of unaccounted incomes in economies. There are several methods to measure size of unaccounted income (or shadow economy) - e.g., monetary approach (or currency demand approach), latent variable approach and global indicator approach. Present paper proposes an alternative method by using transport as a universal input. The method is applied to Indian data. To capture the changing structural relationship between input-output and annual volatility of demands, we tested the methodology for two successive Input-Output tables and three consecutive financial years. Since the analysis is based on assumptions, a comparative static analysis is carried out to check the sensitivity of estimates to changes in the assumptions.

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