Erkus, HakanKaragoz, Kadir2024-08-042024-08-0420091300-3623https://hdl.handle.net/11616/104669Today, it is widely accepted that gradually large amount of economic activities happen inside the underground economy. Due to its nature, it is impossible to estimate precisely the real size of the underground economy. Therefore, its size can only be estimated indirectly, based on some assumptions. An easy and common method for measuring the size of the underground economy is to use macro data such as money demand or electricity demand to infer what the legitimate economy needs, and then to attribute the remaining consumption to the underground economy. There is a long-standing hypothesis that there is a relationship between taxes and the degree of tax evasion, or the size of underground economy and various theoretical models have been proposed in support of this hypothesis. In this paper, it is aimed to estimate the size of underground economy (via Tanzi's methodology) and in some detail the empirical relationship between the relative size of the underground economy and tax evasion rate in Turkey. The estimations reveal that the size of underground economic activities and tax evasion is following a time path with ups and downs, and reached the 86.73% of formal economy.trinfo:eu-repo/semantics/closedAccessUnderground economyTax evasionTurkeyCurrency demand approachArticle156126140WOS:000420257100009N/A