Revaluating the Tanzi-Model to Estimate the Underground Economy

Since the early 1980s, the interest in the nature and size of the non-measured economy (both the informal and the illegal one) was born among researchers in the US. Since then, several models to estimate the shadow and/or the underground economy appeared in the literature, each with its own theoretical pros and cons. In this paper we show that it is possible to overcome earlier expressed criticism of the Tanzi-model (1983). Its lack of a base year without any underground economy can be overcome, by using the natural experiment of the introduction of the Euro. However, this paper also comes up with new criticism. It shows that the crucial relationship of the Tanzi-model between taxes and the demand for cash money is not time robust, hence the model is not useful for estimating the underground economy nowadays. We believe that the change in financial conditions could partially explain the decline in the relevance of taxes as a means to evaluate the underground economy. We build a revised Tanzi model and try to find variables apart from tax evasion incentives in order to explain the underground economy.Underground Economy Estimation, Shadow Economy, Tax Evasion

Viable Singularity-Free f(R) Gravity Without a Cosmological Constant

Several authors have argued that self-consistent $f(R)$ gravity models distinct from $\Lambda$CDM are almost ruled out. Confronting such claims, we present a particular two-parameter $f(R)$ model that: (a) is cosmologically viable and distinguishable from $\Lambda$CDM; (b) is compatible with the existence of relativistic stars; (c) is free of singularities of the Ricci scalar during the cosmological evolution and (d) allows the addition of high curvature corrections that could be relevant for inflation.Comment: 4 pages, 3 figures, accepted for publication in Phys. Rev. Let

Private Security Companies and Local Populations : An Exploratory Study of Afghanistan and Angola

This paper looks at how local populations perceive Private Security Companies (PSCs) and what the impact of their activities may be on peoples’ every day lives, examining the two country cases, Afghanistan and Angola. The role and effects of PSCs have been discussed from various angles in the past but little attention has been paid to the perspectives of the local population. The goal of this exploratory study is to provide some tentative insights into the perceived positive and negative, direct and indirect impact of PSCs on the local population. One of the central findings from the two cases is the overall negative view of those interviewed towards PSCs. The study suggests that PSCs contribute to a sense of distrust and insecurity. Among the main reasons for this are an overall lack of transparency regarding PSCs, with respect to hiring practices, mandates, identification, accountability, and supervision; the heavy armament of PSCs; and lacking regulation (respectively lacking implementation) of security companies. The paper offers some recommendations, how the concerns of the local population could be better addressed.Das vorliegende Working Paper untersucht anhand der beiden Länderbeispiele Afghanistan and Angola wie lokale Bevölkerungen private Sicherheitsfirmen (PSCs) wahrnehmen und welchen Einfluss ihre Aktivitäten auf das Alltagsleben der Bevölkerung haben. Die Rolle und die Auswirkungen von PSCs wurden in den letzten Jahren aus verschiedenen Blickwinkeln analysiert, aber bislang wurde der Perspektive der lokalen Bevölkerung nur wenig Beachtung geschenkt. Das Ziel dieser explorativen Studie ist es, einige erste Einblicke in die wahrgenommen positiven und negativen, direkten und indirekten Wirkungen von PSCs auf die lokale Bevölkerung zu erfassen. Eines der Hauptergebnisse der beiden Fallstudien ist, dass PSCs in überwiegend negativem Licht betrachtet werden. Die Resultate legen nahe, dass PSCs zu einem Gefühl der Unsicherheit und des Misstrauens beitragen. Die zentralen Gründe dafür sind unter anderem die schwere Bewaffnung der PSCs, fehlende Kennzeichnungen sowie die generell mangelhafte Transparenz der PSCs bezüglich ihrer Mandate und bei der Rekrutierung. Weiter werden die fehlende Rechenschaftspflicht und Aufsicht sowie die ungenügende Regulierung (beziehungsweise deren mangelhafte Umsetzung) von privaten Sicherheitskräften kritisiert. Die Arbeit entwickelt abschliessend einige Empfehlungen, wie die Bedenken der Bevölkerung besser berücksichtigt werden können

Uniform semiclassical approximation in quantum statistical mechanics

We present a simple method to deal with caustics in the semiclassical approximation to the partition function of a one-dimensional quantum system. The procedure, which makes use of complex trajectories, is applied to the quartic double-well potential.Comment: 5 pages, 1 figure, Latex. Contribution to the Proceedings of the XXI Brazilian National Meeting on Particles and Fields (Sao Lourenco, October 23-27, 2000

Gravity Models of Trade-based Money Laundering

Several attempts have been made in the economics literature to measure money laundering. However, the adequacy of these models is difficult to assess, as money laundering takes place secretly and, hence, goes unobserved. An exception is trade- based money laundering (TBML), a special form of trade abuse that has been discovered only recently. TBML refers to criminal proceeds that are transferred around the world using fake invoices that under- or overvalue imports and exports. This article is a first attempt to test well-known prototype models proposed by Walker and Unger to predict illicit money laundering flows and to apply traditional gravity models borrowed from international trade theory. To do so, we use a dataset of Zdanowicz of TBML flows from the US to 199 countries. Our test rejects the specifications of the Walker and Unger prototype models, at least for TBML. The traditional gravity model that we present here can indeed explain TBML flows worldwide in a plausible manner. An important determinant is licit trade, the mass in which TBML is hidden. Furthermore, our results suggest that criminals use TBML in order to escape the stricter anti money laundering regulations of financial markets.Money laundering, international trade, gravity model, Walker model.

Are Dark Number Estimates of Crime Feasible and Useful?

Criminals want to minimize crime detection. This makes crime hard to study, especially when attempting an overview, such as estimating the volume. While policymakers seek dark number estimates of the total volume, there is skepticism among academics about whether they are valid, reliable, feasible, or even useful. This chapter argues, specifically for money laundering, that whether to conduct dark number crime estimates should be determined by relevance. Such estimates can be relevant for policy priority setting, policy effectiveness testing, and scientific relevance. There are legitimate concerns about dark number estimates of crime. We might be unsure which data to use, uncertain about the right research method, and in doubt about the appropriate model, but these doubts and uncertainties should not terminate the search. Actually, doubt and uncertainty should be a driving force for research

Activities, Access Control, and Crime:a Quasi-Experimental Study regarding Entry Gates at Train Stations in the Netherlands

This article discusses a unique “natural experiment,” the introduction of entry gates at Dutch train stations and the potential effects of this on crime in the areas around these stations. A quasi-experimental study was carried out to show that introducing entry gates correlated with a drop in crime in these areas. After entry gates had been introduced, potential offenders could only enter train stations with a valid ticket, which meant that they would be less likely to enter or leave these stations and more likely to choose other places to hang around in or for entering and leaving trains. A dataset was created in which the crime rates around train stations were registered for each month in the years 2013 through 2018. The changing numbers of travelers at each station were also taken into account, as this variable probably correlates with the amount of crime. A two-way fixed-effects model was run on data for about 260 train stations, with and without entry gates, using the relative crime rate per thousand travelers as the dependent variable. Based on this relative crime rate, the use of entry gates was found to coincide with a decrease of 9% in crime, compared to a situation without entry gates. This study can inform policymakers about the potential effects of entry gates in particular and about situational crime prevention in general. Moreover, it illustrates how implementing measures at various locations at different moments enables the effectiveness of such measures to be tested more precisely and with more confidence

Searching for Smurfs: Testing if Money Launderers Know Alert Thresholds

To combat money laundering, banks raise and review alerts on transactions that exceed confidential thresholds. This paper presents a data-driven approach to detect smurfing, i.e., money launderers seeking to evade detection by breaking up large transactions into amounts under the secret thresholds. The approach utilizes the notion of a counterfactual distribution and relies on two assumptions: (i) smurfing is unfeasible for the very largest financial transactions and (ii) money launderers have incentives to make smurfed transactions close to the thresholds. Simulations suggest that the approach can detect smurfing when as little as 0.1-0.5\% of all bank transactions are subject to smurfing. An application to real data from a systemically important Danish bank finds no evidence of smurfing and, thus, no evidence of leaked confidential thresholds. An implementation of our approach will be available online, providing a free and easy-to-use tool for banks