ABSTRACT
This chapter explains the general framework which is used in the estimation of the 'hidden economy' in the literature either explicitly or implicitly. Although a general framework justifies most methods used in the estimation of the 'hidden economy', the statistical problems associated with the estimation and updating of these estimates differs considerably from one method to other. As most studies on the estimation of the 'hidden economy' used log-linear model of currency demand, it appears most people used an established theory in their empirical work. The chapter also explains the general framework which has been either implicit or explicit theoretical justification of the empirical models. The experiment using the 'hidden economy' estimates on government expenditure function is an elaborate exercise.
