Academic journal article Journal of Economics and Economic Education Research

Methodological Approaches to the Construction of an Econometric Model of Hidden Profits at the Micro Level

Academic journal article Journal of Economics and Economic Education Research

Methodological Approaches to the Construction of an Econometric Model of Hidden Profits at the Micro Level

Article excerpt

INTRODUCTION

Compliance with econometric principles allows the problem of improved model selection and search of their new types to approach. Among them, the most important are the principles of the system orientation and accounting for the probability characteristics of the studied parameters (Grigoreva E.A., and Fesina E.L., 2014). The system orientation principle provides selection of the most important relationships between explanatory and dependent variables what is especially important in conditions of the utmost brevity of information about unobservable phenomena in the economy and requires the involvement of experts (Vetoshkina E. Yu., Tukhvatullin R.Sh., 2015). Accounting for the probability parameters of the shadow economy and their control is one of the most problematic principles of econometric calculations, since it is connected with tracking the processes which are unregistered by legal statistics (V.V.Fedoseev, 1999). Criteria and principles of econometric calculations allow approaching to the problem of choosing a model with a clear understanding of the possibilities for obtaining estimates of the shadow economy with a high degree of reliability.

FORMULATION OF THE PROBLEM

When implementing a regression model of hidden profits at the micro level the following tasks have been set:

1. Determine the criteria and principles of building econometric models.

2. Build a hidden profits model using different forms of dependencies.

3. Evaluate parameters of a hidden profit model, and the adequacy level of the obtained relationships.

4. Conduct a comparative analysis of hidden profit models, and to identify the most adequate one.

Regression equations were estimated with the use of various forms of dependencies. In order to identify the behavior of a hidden profit depending on the dominant factor (legal profit) a hypothesis has recently been put forward on existence of a polynomial dependence. Upon a nonlinear form of dependence polynomials of different orders were used to produce local approximations of empirical data to the theoretical ones. To this end, the empirical data were studied in a small neighborhood of the point of greatest interest. Comparative analysis of several types of dependencies has allowed the most preferred function of approximation of empirical data to the theoretical ones to choose.

PURPOSE OF THE STUDY

The main criterion for econometric calculations is associated with the goal setting which allows an adequate model of hidden profits to choose. The second most important criterion involves determining the predictive estimates of hidden profit that can be ranked according to their degree of importance for use in the practice of calculations. Estimates of hidden profits derived from the use of multiple models are required to select among them the most appropriate ones, and the magnitude of the spread between them gives an indication of how reliably they describe the phenomenon under investigation.

When building an econometric model of hidden profits it is necessary to take into account two main types of model functioning: imitation and normative (Ferster E., 1982). Regarding aggregate models, they are particularly useful in the development of long-term predictions of a hidden profit and allow obtaining relatively accurate results. With their aggregation, an error averaging occurs, the model becomes more stable with respect to errors of measurement of initial values what is especially important when dealing with poorly studied dependencies in terms of doing shadow economic activities at the micro level (Haavelmo T., 1994).

MATERIALS AND METHODS

For the analysis of the shadow economy and identification of trends in its development at the micro level, we used data of current legal reporting of large enterprises, expert assessments, data of unformalized in-depth interviews with senior managers, as well as results of researches of domestic and foreign authors on the problem under study. …

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