UC Merced UC Merced Undergraduate Research Journal Author Publication Date

Jesse Huang
UC Merced Undergraduate Research Journal   unpublished
The significance of underground economies relative to a country's calculation of GDP was further examined under the assumption of the inclusion of them when performing this computation. Challenging the current methodology of GDP and how it's calculated, as done traditionally through assessing and measuring the following sectors of a country's economy: private consumption, gross investment, government investment, government spending, and net exports, the underground economy proves to be a worthy
more » ... oves to be a worthy cause of further analysis, as it's assignment to any one sector may not be appropriate. Though illicit activities constituting the underground economy prove hard to examine with any level of certainty, the substantial benefits of inclusion deliver great advantages to a country. It is from these findings that have surfaced a greater issue with what is standard practice when calculating GDP. Though the underground economy is filled with a great level of uncertainty, findings suggest including it in the measure of GDP, but done so with caution, as there are risks of jumping to conclusions.