Estimates of the underground economy in Australia

In an age of tighter government regulation, many individuals and businesses are distorting our notion of the size of the Australian economy by activel y participating in the underground economy. The consequences are clear: pol icy makers have imperfect knowledge on the state of economic affairs. Altho ugh there exists considerable international literature on the size of the u nderground economy, academics and public officials alike appear to have pai d little attention to the extent of illicit economic behaviour in Australia . The aim of this paper is to provide the first known time-series estimate of the size of the Australian underground economy and to illustrate that it s existence has implications far the nature of the business cycle in Austra lia.