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The hidden economy in Jordan: A MIMIC approach

Author

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  • Mohammed Abu Alfoul
  • Zakia Ahmad Mishal
  • Friedrich Schneider
  • Khaled Magableh
  • Abeer Rafi Alabdulraheem

Abstract

This paper uses the Multiple Indicators Multiple Causes (MIMIC) approach to determine the annual size and growth of the hidden economy in Jordan for the period 1980–2018. We find that the key causal variables of the hidden economy in Jordan are: female labor force participation, the inflation rate, the unemployment rate, total tax revenue, and the budget deficit. The growth of these causal variables increases Jordan’s hidden economy. According to our findings, the estimated average of the hidden economy from 1980 to 2018 is 17.6% of the official GDP. Thus, it comprises a large portion of the official GDP. Furthermore, our results suggest an increase in the size of Jordan’s hidden economy from 11.8% in 1980 to 22.4% in 2018. The overall results can assist policymakers in Jordan to combat and reduce the size of the hidden economy.

Suggested Citation

  • Mohammed Abu Alfoul & Zakia Ahmad Mishal & Friedrich Schneider & Khaled Magableh & Abeer Rafi Alabdulraheem, 2022. "The hidden economy in Jordan: A MIMIC approach," Cogent Economics & Finance, Taylor & Francis Journals, vol. 10(1), pages 2031434-203, December.
    • Handle: RePEc:taf:oaefxx:v:10:y:2022:i:1:p:2031434
    DOI: 10.1080/23322039.2022.2031434
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