ABSTRACT
The underground economy has been written about extensively but its definition has always been a matter of contention. For some authors the underground economy encapsulates activities that ought to be recorded in the national accounts but is not because of taxpayers’ failure to report income in whole or in part. For others it includes not only activities that fall within national accounting boundaries but also illegal activities such as prostitution and drug trades. In some countries certain activities, which are illegal by Australian standards, are not illegal. This throws open the possibility for including them in the activities of the underground economy particularly if we argue the national accounting case. Yet again, other authors argue that do-it-yourself and non-market activities should be measured as part of the underground economy. These inconsistencies have undoubtedly led to the vast array of estimates of the underground economy we have seen in Chapter One and cast doubts on their reliability for public policy making. It is the development of the national accounting system that appears to have contributed in some respects to this confusion.
