IDEAS home Printed from https://ideas.repec.org/a/eut/journl/v19y2015i1p91.html
   My bibliography  Save this article

Modeling Iran`s Underground Economy: A Fuzzy Logic Approach

Author

Listed:
  • Mohammad Hossien Pourkazemi

    (Department of Economics, Shahid Beheshti University,Tehran, Iran.)

  • Mohammad Naser Sherafat

    (Department of Economics, Shahid Beheshti University,Tehran, Iran.)

  • Delfan Azari

    (Department of Economics, Shahid Beheshti University,Tehran, Iran.)

Abstract

The underground economy has long been of interest to economists and has devoted extensive studies to itself in economic literature. Through fuzzy logic approach in present research, we estimated the size of underground economy of Iran over the period of 1978-2010. For this purpose and according to theoretical bases and previous studies, variables such as GDP per capita, ratio of direct taxes to GDP and an index of business environment for considering the effect of institutional structures have been used as the most important explanatory variables for estimating country's underground economy. For considering the quality of institutions in this research we have used a local index for the first time compared with other internal studies. Our results indicate an oscillatory trend as the average of relative and absolute size of underground economy has decreased during the years of first development plan compared with period of war and revolution but increased during the second plan compared with the first one. Also it has decreased over the years of third plan in comparison with the second one but again it has increased during the fourth development plan. According to the results, the average of relative size of underground economy to official output during the years of war and revolution, first, second, third and the fourth development plan was approximately estimated 21, 12, 29, 19 and 20 percent respectively. During the entire period it was approximately 20 percent.

Suggested Citation

  • Mohammad Hossien Pourkazemi & Mohammad Naser Sherafat & Delfan Azari, 2015. "Modeling Iran`s Underground Economy: A Fuzzy Logic Approach," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 19(1), pages 91-106, Winter.
    • Handle: RePEc:eut:journl:v:19:y:2015:i:1:p:91
    as

    Download full text from publisher

    File URL: ftp://80.66.179.253/eut/journl/20151-7.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kemal, M. Ali, 2007. "Fresh Assessment of the Underground Economy and Tax Evasion in Pakistan: Causes, Consequences, and Linkages with the Formal Economy," MPRA Paper 2226, University Library of Munich, Germany.
    2. David E. A. Giles, 1999. "Modelling the hidden economy and the tax-gap in New Zealand," Empirical Economics, Springer, vol. 24(4), pages 621-640.
    3. Corina Maria ENE & Natalita HURDUC, 2010. "A Fuzzy Model To Estimate Romanian Underground Economy," Internal Auditing and Risk Management, Athenaeum University of Bucharest, vol. 2(18), pages 29-38, June.
    4. Dominik Enste, 2010. "Shadow Economy - The Impact of Regulation in OECD-countries," International Economic Journal, Taylor & Francis Journals, vol. 24(4), pages 555-571.
    5. Granger,Clive W. J., 1999. "Empirical Modeling in Economics," Cambridge Books, Cambridge University Press, number 9780521662086, January.
    6. Klarita Gërxhani, 2004. "The Informal Sector in Developed and Less Developed Countries: A Literature Survey," Public Choice, Springer, vol. 120(3_4), pages 267-300, September.
    7. Friedrich Schneider & Andreas Buehn & Claudio E. Montenegro, 2011. "Shadow Economies All Over the World: New Estimates for 162 Countries from 1999 to 2007," Chapters, in: Friedrich Schneider (ed.), Handbook on the Shadow Economy, chapter 1, Edward Elgar Publishing.
    8. Yu, Tiffany Hui-Kuang & Wang, David Han-Min & Chen, Su-Jane, 2006. "A fuzzy logic approach to modeling the underground economy in Taiwan," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 362(2), pages 471-479.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Feige, Edgar L., 2015. "Reflections on the meaning and measurement of Unobserved Economies: What do we really know about the “Shadow Economy”?," MPRA Paper 68466, University Library of Munich, Germany.
    2. Schneider, Friedrich, 2005. "Shadow economies around the world: what do we really know?," European Journal of Political Economy, Elsevier, vol. 21(3), pages 598-642, September.
    3. Bashlakova, Volga & Bashlakov, Henadzi, 2021. "The study of the shadow economy in modern conditions: Theory, methodology, practice," The Quarterly Review of Economics and Finance, Elsevier, vol. 81(C), pages 468-480.
    4. Friedrich Schneider & Robert Klinglmair, 2004. "Shadow economies around the world: what do we know?," Economics working papers 2004-03, Department of Economics, Johannes Kepler University Linz, Austria.
    5. Ahmed Gulzar & Novaira Junaid & Adnan Haider, 2010. "What is Hidden in the Hidden Economy of Pakistan? Size, Causes, Issues, and Implications," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 49(4), pages 665-704.
    6. Ceyhun Elgin & Friedrich Schneider, 2016. "Shadow Economies in OECD Countries: DGE vs. MIMIC Approaches," Bogazici Journal, Review of Social, Economic and Administrative Studies, Bogazici University, Department of Economics, vol. 30(1), pages 51-75.
    7. Friedrich Schneider & Friedrich Schneider, 2008. "Shadow Economies and Corruption all over the World: What do we Really Know?," Chapters, in: Michael Pickhardt & Edward Shinnick (ed.), The Shadow Economy, Corruption and Governance, chapter 7, pages 122-187, Edward Elgar Publishing.
    8. Massomeh Hajilee & Farhang Niroomand & Linda A. Hayes, 2023. "The relationship between interest rate volatility and the shadow economy in OECD countries: An asymmetric analysis," Australian Economic Papers, Wiley Blackwell, vol. 62(3), pages 539-566, September.
    9. Friedrich SCHNEIDER, 2016. "Estimating the Size of the Shadow Economy: Methods, Problems and Open Questions," Turkish Economic Review, KSP Journals, vol. 3(2), pages 256-280, June.
    10. Andreas Buehn & Christian Lessmann & Gunther Markwardt, 2013. "Decentralization and the shadow economy: Oates meets Allingham--Sandmo," Applied Economics, Taylor & Francis Journals, vol. 45(18), pages 2567-2578, June.
    11. Luisanna Onnis & Patrizio Tirelli, 2010. "Challenging the popular wisdom. New estimates of the unobserved economy," Working Papers 184, University of Milano-Bicocca, Department of Economics, revised Apr 2010.
    12. Andreas Buhn & Alexander Karmann & Friedrich Schneider, 2007. "Size and Development of the Shadow Economy and of Do-it-Yourself Activities: The Case of Germany," CREMA Working Paper Series 2007-14, Center for Research in Economics, Management and the Arts (CREMA).
    13. MAURIN Alain & SOOKRAM Sandra & WATSON Patrick Kent, 2010. "Measuring the Size of the Hidden Economy in Trinidad & Tobago," EcoMod2003 330700098, EcoMod.
    14. Luisanna Onnis & Patrizio Tirelli, 2011. "Institutions, policies and economic development. What are the causes of the shadow economy?," Working Papers 206, University of Milano-Bicocca, Department of Economics, revised Mar 2011.
    15. Rajeev Goel & James Saunoris, 2014. "Global corruption and the shadow economy: spatial aspects," Public Choice, Springer, vol. 161(1), pages 119-139, October.
    16. Shi Wang & Yizhou Yuan & Hua Wang, 2019. "Corruption, Hidden Economy and Environmental Pollution: A Spatial Econometric Analysis Based on China’s Provincial Panel Data," IJERPH, MDPI, vol. 16(16), pages 1-23, August.
    17. Julia Friesen & Konstantin M. Wacker, 2019. "Who is Afraid of Informal Competition? The Role of Finance for Firms in Developing and Emerging Economies," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 31(4), pages 1126-1146, September.
    18. Goel, Rajeev K. & Saunoris, James W., 2014. "Military versus non-military government spending and the shadow economy," Economic Systems, Elsevier, vol. 38(3), pages 350-359.
    19. Mazhar, Ummad & Méon, Pierre-Guillaume, 2017. "Taxing the unobservable: The impact of the shadow economy on inflation and taxation," World Development, Elsevier, vol. 90(C), pages 89-103.
    20. Piotr Dybka & Michał Kowalczuk & Bartosz Olesiński & Andrzej Torój & Marek Rozkrut, 2019. "Currency demand and MIMIC models: towards a structured hybrid method of measuring the shadow economy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(1), pages 4-40, February.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eut:journl:v:19:y:2015:i:1:p:91. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: [z.rahimalipour] (email available below). General contact details of provider: https://edirc.repec.org/data/fecutir.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.