Estimation of Underground Economy in Iran's Provinces and Effective Factors

Document Type : Research Paper

Authors

1 Ph.D. Candidate in Economics, University of Tabriz

2 Associate Professor of Economics, University of Tabriz

3 Assistant Professor of Economics, University of Shiraz

Abstract

The purpose of this study was to investigate the effect of Iran's oil revenues on macroeconomic variables in the form of DSGE model during the period of 1995-2015 in the context of open economy based on the real business cycle pattern, in line with the conditions of the Iranian economy including households, enterprises, government and The monetary authority is the oil sector with an emphasis on the National Development Fund. The results of simulation of the model variables indicate that, due to the positive impetus of oil revenues, production, consumption, investment, government spending under both scenarios increases, but the increase in the direct tax distribution scenario is higher than the base scenario. Also, the greater the share of government-owned oil revenues (50 and 75 percent) in households from the current budget, the increase will also be higher in the resources of the National Development Fund. Consequently, the contribution of the Facility to the Private Sector (F) increases. According to the modeling of this study, the increased private sector investment ( ) also increases, as a result of non-oil production in the country. Therefore, based on the results obtained, the direct tax-deductible distribution policy is recommended as a supplement to the National Development Fund.

Keywords

Main Subjects

References

  1. Ahn, N., & De La Rica, S. (1997). The underground economy in Spain. An alternative to unemployment?. Applied Economics, 29, 733-743.
  2. Arabmaziar-Yazdi, A. (2000). Underground economy in Iran: Size, causes and effect of it in three recent decades. The journal of Plan and Baujet. 62-63. 61-102. (In Persian).
  3. Ariyo, A., & Bekoe, W. (2012). Currency demand, the underground economy and tax evasion: The case of Nigeria. Journal of Monetary and Economic Integration, 11(2), 129-157.‏
  4. Asiedu, E., & Stengos, T. (2014). An empirical estimation of the underground economy in Ghana. Economics Research International.‏
  5. Schneider, F., Buehn, A., & Montenegro, C. E. (2011). Shadow economies all over the world: New estimates for 162 countries from 1999 to 2007. Handbook on the shadow economy, 9-77.‏
  6. .Buhn, A., Karmann, A., & Schneider, F. (2007). Size and development of shadow economy and of do-it-yourself activities in Germany. Cesifo Working Paper, 2021.  https://papers.ssrn.com/sol3/papers.cfm?abstract_id=995414
  7. Cagan, P. (1958). The Demand for currency relative to total money supply, Journal of Political Economy, 66:303-328.
  8. Christopoulos, D. K. )2003(. Does underground economy respond symmetrically to tax changes? Evidence from Greece. Economic Modeling, 20)3(, 563- 570.
  9. Falahati A, Nazifi M, Abbaspour S. (2012). Modeling shadow economy and estimation tax evasion in Iran: Using artificial neural networks. Economic development research. 2 (6), 33-58. (In Persian).
  10. Frey, B.S., & Weck-Hanneman, H. (1984). The hidden economy as an unobservable variable. European Economic Review, 26, 33-53.
  11.  Giles, D. (1999). Measuring the hidden economy: Implications for econometric modeling. Economic Journal. 109, 370-380.
  12. Giles, D. (1999). Modeling the hidden economy in the tax-gap in New Zealand. Empirical Economices, 24(4), 621-640.
  13. Goel, R. K., Saunoris, J. W., & Schneider, F. (2017). Drivers of the underground economy around the millienium: A long term look for the United States.‏
  14. González-Fernández, M., & González-Velasco, C. (2015). Analysis of the shadow economy in the Spanish regions. Journal of Policy Modeling, 37(6), 1049-1064.‏
  15.  Hadian E, Tahvili A. (2013). Tax evasion and its determinants in the Iranian economy (1971-2007). The Journal of Planning and Budgeting. 18 (2). 39-58. (In Persian).
  16. Jafari-Samimi, A., & Akbari, M. (2012). Investigating of the effecting factors on underground economics in Iran (1977-2008). The first E-National Conference of Iran Economics View. (In Pesrsian)
  17. Karimi, M., Delangizan, S., Heidarian, R. (2018). Determinants of the factors effecting underground economy in Iran (1976-2010): A Vector Error Correction Model. Journal of Economic Research (Tahghighat- E- Eghtesadi), 53(2), 367-386. . (In Pesrsian)
  18. Khajavi, M., Rezaei, E., & Khodavaisi, H. (2011). The estimation of underground and tax divide in Iran. Economics research, 11(42), 65-90. . (In Pesrsian)
  19. Macias, J. B., & Cazzavillan, G. (2009). The dynamics of parallel economies. Measuring the informal sector in Mexico. Research in Economics, 63(3), 189-199.‏
  20. Maddah, M, & Mohammadnia-Sarvary, Z. (2017). Empirical analysis the relationship among corruption, shadow economy and environmental pollution among selected OPEC countries (LISREL approach). The Journal of Economic Investigation, 13(4), 1-18. (In Persian).
  21. Mehrabi-Basharabadi, H., Kuchakzadeh, S,. & Taboli, H. (2009). Does the shadow economy threaten economic growth? (Case study: Iran). The Journal of Economic Research. 15(45). 181- 198. (In Persian).
  22. Naderan, E., Sedighi, H. (2009). The Effect of taxes and their components on size of underground economy in Iran (1973-2003). Journal of Economic Research (Tahghighat- E- Eghtesadi). 43(4). (In Persian).
  23. Nasrolahi, Z., Farzanegan, M., Talei Ardakani, S. (2012). Shadow economy trends in Iran: A comparative study using Amos and Lisrel. The Economic Research, 12(2), 61-92. . (In Pesrsian)
  24. Nasrollahi, Z., Hosseini, A. (2017). Investigating the relationship between financial development and underground economy in Iran. The Economic Research (Scientific Research Quarterly). 17(2). 1-24. (In Pesrsian)
  25. Omidipour, R., Pajooyan, J., Mohamadi, T., Memarnezhad, A. (2016). The estimating of underground economy and tax enversion: Case study of Iran. Journal of Tax Research. 23(28).
  26.  Pedersen, S. (2003). The shadow economy in Germany, Great Britain and Scandinavia: A measurement based on questionnaire service, The Rockwoll Foundation Research Unit. No. 10
  27. Piraee, KH., & Rajaee, H. (2015). Estimating size of underground economy in Iran and investigation the causes and effects. Quarterly Journal of Macro and Strategic Policies. 9(3). 21-42. (In Persian).
  28. Salimifar, M., & Keivanfar, M. (2009). Informal economy in Iran and the effect of inflation on it. The Journal of Knowledge and Development. 17 (1). 1-27. (In Persian).
  29. Sameti, M,. Sameti, M,. Dallali-Esfahani. (2008). The estimation of underground economy size in Iran (1964-2004): By using MIMIC. International Economics Studies. 20(2). 89-114. (In Persian).
  30. Schneider, F., & Enste, D.  (2000). Shadow economics: Size, case and consequences, The Journal of Economic Literature, 77-114.
  31. Schneider, F., & Enste, D. (2003). Hiding in the shadows: The growth of the underground economy (No. 30). International Monetary Fund.‏
  32. Schneider, F., & Enste, D. H. (2000). Shadow economies: size, causes, and consequences. Journal of Economic Literature, 38(1), 77-114.‏
  33. Schneider, F., & Hametner, B. (2014). The shadow economy in Colombia: size and effects on economic growth. Peace Economics, Peace Science and Public Policy, 20(2), 293-325.‏
  34.  Shakibaei, A,. & Raeispour, A. (2007). The Evolution of shadow economy in Iran: A DYMIMIC approach. The Economic Research. 7(3). 17-36. (In Persian).
  35. Shneider, F. (2014). The shadow economy, Studien/ pfuschneu/ 2014/ ShadEc _2014.doc
  36. Taghineghad, V., Nikpoor, M. (2014). Underground economy and its causes: A case study of Iran. Journal of Applied Economics Studies in Iran, 2(8), 53-72. (In Pesrsian)
  37.  Tanzi, V. (1980). The underground economy in the United States: Estimate and implications. Banca Nazionale Del Lavoro, 135/4,427-453
  38.  Tanzi, V. (1983). The underground economy in the United States: Annual estimates. IMF staff papers, 30( 2), 283-305.
  39. Tanzi, V. (1999). Uses and abuses of estimates of the underground economy. Economic Journal, 456, 338-347.
  40. Tanzi, V. (2008). The Shadow Economy, Its Causes and Its Consequences. International Seminar on the Shadow Economy Index in Brazilian. Brazilian institute for Ethics in competition.

Files

Share

How to cite

Statistics