Underground Economy Estimation in Iran by Mimic Method

Soheila Kaghazian, Isa Zaghi Jojadeh and Yazdan Naghdi

Economic Studies journal, 2015, issue 1, 90-109

Abstract: Underground economy, is all countries economy reality and forms a percent of each country`s economy and is the cause of many social and economic disorders that presents its existence in community with an unseen hand and is the cause of monetary and financial problems emergence and obscures economic data and makes inappropriate performance of economic policy therefore, due to the sensitivity of this phenomenon, this research measure the volume of smuggled goods during the years of (1974-2011) based on Lisrel software. In this study, for determining the size of the underground economy, firstly, its index has been determined by using MIMIC method in a ranked series of numbers and then for the sake of comparing different years, calibration and the previous studies were used to estimate the volume of relative and absolute underground economy. Based on mimic method, the average size of the underground economy during (1974-2011), was about 21% of official GDP. The results of this study show that the openness of the economy, inflation, education and the size of the government are considered main causes of the underground economy in Iran. The average size of the underground economy in past studies, was about 19% of GDP but in this study, it`s two percent higher than the average of the whole period.

JEL-codes: C22 C51 E26 H26 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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