Acharya, Shankar, “The Underground Economy in the United States: Comment on Tanzi,” Staff Papers, International Monetary Fund (Washington), Vol. 31 (December 1984), pp. 742–46.
Corsi, P., R.E. Pollock, and J.L. Prakken, “The Chow test in the presence of serially correlated errors,” Chap. 10 in Evaluating the Reliability of Macro-economic Models, ed, by Gregory C, Chow and Paolo Corsi (New York: John Wiley, 1982).
Tanzi, Vito, “The Underground Economy in the United States: Estimates and Implications,” Banca Nazionale del Lavoro, Quarterly Review, No. 135 (December 1980), pp. 427–53.
Tanzi, Vito, “The Underground Economy in the United States: Annual Estimates, 1930–80,” Staff Papers, International Monetary Fund (Washington), Vol. 30 (June 1983), pp. 283–305.
Tanzi, Vito, “The Underground Economy in the United States: Reply to Acharya,” Staff Papers, International Monetarv Fund (Washington), Vol. 31 (December 1984), pp. 747–50.
Tanzi, Vito, (ed.), The Underground Economy in the United States and Abroad (Lexington, Massachusetts: Lexington Books, 1982). Thomas, J.J., An Introduction to Statistical Analysis for Economists (London: Weidenfeld and Nicolson, 2nd ed., 1983).
Lecturer in Economics, The London School of Economics.
The regression analysis was carried out using TSP 4.0 on a VAX computer. While the estimates of the slope parameters in the regressions for 1930–80 were of the same order of magnitude as those reported by Tanzi, the constant terms differed considerably. The differences in the slope parameter estimates are larger than might have been expected merely as a result of different software packages being applied to the same data set.
This may well reflect the fact that F-tests are sensitive to the presence of serial correlation and tend to overestimate the effects of instability. See Corsi, Pollock, and Prakken (1982).
I would not claim that the dynamic equations reported here are the best possible explanations of In C/M2. It is sufficient for the purpose of this comment to show that they reject the AR1 specification used by Tanzi for his computations.