The size of informal economy in Pakistan

Muhammad Arby (), Muhammad Jahanzeb Malik and Muhammad Hanif

MPRA Paper from University Library of Munich, Germany

Abstract: This paper estimates the size of informal economy in Pakistan by using monetary approach with some modifications, electricity consumption approach and MIMIC model. Under monetary approach, we take care of the issue of the stationarity of variables and use autoregressive distributed lag (ARDL) model instead of simple OLS and add education as an additional factor affecting the size of informal economy along with some other technical improvements in the standard monetary models. The electricity consumption approach and MIMIC models are used for the first time in case of Pakistan. The results show that the informal economy in Pakistan has been about 30 percent of the total economy which declined considerably in 2000s. Currently, about 20 percent of the economic transactions are taking place in the informal sector.

Keywords: Informal Economy; ARDL; MIMIC (search for similar items in EconPapers)
JEL-codes: E26 (search for similar items in EconPapers)
Date: 2010-05-07
New Economics Papers: this item is included in nep-cwa and nep-mac
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Citations: View citations in EconPapers (16)

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Related works:
Working Paper: The Size of Informal Economy in Pakistan (2010)
Working Paper: The Size of Informal Economy in Pakistan (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:22617

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