A short note on business cycles of underground output: are they asymmetric?

Yoke-Kee Eng () and Chin-Yoong Wong

Economics Bulletin, 2008, vol. 3, issue 58, 1-10

Abstract: This short note as the first study investigates the symmetry of fluctuations of underground output around trend for four selected Southeast Asian countries, that is, Malaysia, Indonesia, Thailand, and Philippines, over the time horizon of 1970-2006. In particular, we test if the underground output falls below trend more drastically and severely at shorter time span than when rising above trend. We find no evidence that supports this hypothesis. We thus conclude that asymmetry in fluctuations around trend is not a primary concern in understanding the nature of underground economy. We suggest that the symmetry of fluctuation of underground output, in conjunction with the potential complementary effect on market consumption, may account for the widely documented expansionary fiscal contraction in developing countries.

Keywords: Underground; economy (search for similar items in EconPapers)
JEL-codes: C2 E3 (search for similar items in EconPapers)
Date: 2008-09-17
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Citations: View citations in EconPapers (6)

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