As part of an international research mobility supported through a Horizon Europe framework, members of the IDRL research team delivered the lecture entitled: “From National Systems to Regional Realities: New Advances in Measuring the Shadow Economy in Central and Eastern Europe Using Currency Demand and Dynamic Panel Methods.”

The lecture took place on December 15th, 2025, in a hybrid format, with on-site participation at the Universidade Federal do Rio de Janeiro (UFRJ, Brazil) and online attendance for partner network members.

The session was delivered by Prof. Adriana AnaMaria Davidescu and PhD Student Diana Marina Agafiței from the Bucharest University of Economic Studies (BUES)/National Scientific Research Institute for Labour and Social Protection. The lecture presented two complementary empirical studies advancing the measurement of the shadow economy in Central and Eastern Europe (CEE).

The first study applied an enhanced Currency Demand Approach (CDA) combined with dynamic panel modelling (PMG-ARDL) to estimate the size and determinants of the shadow economy across 13 CEE countries during 1995-2022. The findings highlighted the long-run importance of taxation, enforcement strength, institutional quality, and financial infrastructure in shaping cash demand and informal economic activity. Policy simulations, including Monte Carlo-based scenarios, suggested that strong institutional enforcement is essential for effectively reducing informality.

The second study extended the analysis to a regional perspective, revealing substantial within-country disparities that are often hidden by national averages. The regional results emphasized the importance of governance quality, digitalisation, and labour-market structures, supporting the need for more place-based policy interventions, particularly in peripheral and structurally vulnerable regions.