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Full-Text Articles in Social and Behavioral Sciences
Are The Informal Economy And Cryptocurrency Substitutes Or Complements?, Rajeev K. Goel, Ummad Mazhar
Are The Informal Economy And Cryptocurrency Substitutes Or Complements?, Rajeev K. Goel, Ummad Mazhar
Faculty Publications – Economics
This research considers a new dimension of the effects of the underground sector by examining the spillovers on cryptocurrency holdings. Cryptocurrencies offer a relatively greater ability to dodge taxes and ensure the anonymity of holders, providing attractive avenues for underground operators to stash their informal-sector earnings. Our results, based on data from more than 50 nations, show that a greater prevalence of the underground economy in a nation is indeed associated with greater cryptocurrency holdings. This result holds across an alternative measure of the shadow economy, and when the bi-directional causality between the shadow economy and cryptocurrency holdings is considered. …