UNOFFICIAL ECONOMY IN CROATIA: ESTIMATION METHODS AND RESULTS

According to the Eurostat’s recommendations, GDP of each country must be as exhaustive as possible regarding economic activity coverage. All EU member states and candidate countries have a strict obligation to include the estimate of the unofficial economy (UE) in official GDP data. Over the past few years, the Croatian Bureau of Statistics (CBS) has been working on a project of improvement the exhaustiveness of national accounts. Recently, official national accounts data have been revised, thus expanding coverage to include the estimated unofficial economy. This paper deals with the comparison of results of various methods used for UE estimation in Croatia. Besides description of methods and results presented in recent economic literature in this paper, author presents Eurostat methodology for the estimation of non-exhaustiveness of national accounts used in Croatian national accounts. Additionally author developed estimation of undeclared work based on post-stratification of labour force survey data. The aim of the paper is to test the hypothesis that various methods of UE estimation differ, in assumptions and methodology used, but all methods point to similar conclusion on trends of unofficial economy. Author found that in the period of economic growth, a share of unofficial economy is decreasing while in downturn phase of economic cycle unofficial economy helps to reduce overall negative economic effects on the income of individuals