Shadow economy in Ukraine: modelling and analysis

Abstract

This paper provides an analysis of the size and development of the shadow economy in Ukraine. The shadow economy is defined as a system of interconnected relationships that take place outside the existing laws and do not allow direct and regular statistical accounting and tax control. Insufficient quality of state institutions, ineffective regulatory policy, imperfection of the tax system, unformed competitive environment and corruption are the driving forces for the shadow economy. The paper identifies the socio-economic consequences arising from the functioning of the shadow economy. Economic-mathematical model was constructed to identify patterns of shadow economy functioning. Economic-mathematical analysis allows formulating a list of proposals on ways and means of reducing the size of the shadow economy in Ukraine.