Gray economy

The gray economy includes any economic activity that is legal, but which is unrecorded and unregulated. These transactions frequently involve arbitrage opportunities where there is a disparity in price points across geographic regions. These transactions are not recorded in the official statistics for economic activity, so that a country’s reported economic activity tends to be underreported.

An example of the gray economy is goods bought in one country by tourists and sold when they return home for a higher price. Thus, a cell phone may sell for $1,000 in Argentina and $500 in the United States, so an Argentine tourist buys several phones while in the United States for $500 each, and then resells them when he returns home, perhaps for a price somewhat lower than the $1,000 list price in Argentina.