Analysis of the effects of the shadow economy on the per capita income of selected developing and developed countries

Document Type : Scientific-research

Authors

1 PhD student, Islamic Azad University, Arak branch

2 Professor, Faculty of Economics and Social Sciences, Buali sina University, Hamedanm

3 Assistant Professor, Department of Economics, Islamic Azad University

10.30465/ce.2022.40670.1767

Abstract

Based on the theoretical literature, there are different and contradictory approaches about the effect of shadow economy on per capita income. So, according to the importance of this issue for proper policy-making, this study examines the effect of the shadow economy on per capita income in the period 2005 to 2017 using the PARDL method in two groups of developing and developed countries in the short and long term. According to the results in the short run, the shadow economy has a significant and negative impact on per capita income in both set of countries. In the long term, the effects of this variable on per capita income in developed countries is insignificant, but in the developing countries have been significant, and its effect is greater than short term. Thus, developed countries have the ability to control the negative effects of the shadow economy on per capita income in the long run, while for developing countries, the negative effects have increased in the long run.

Keywords

References

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Journal of Iranian Economic Issues
Volume 9, Issue 2
October 2022
Pages 331-363

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History

  • Receive Date: 12 March 2022
  • Revise Date: 17 July 2022
  • Accept Date: 19 August 2022

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