The Size of Informal Economy in Pakistan
AbstractThis 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. Key Words: Informal Economy, ARDL, MIMIC Acknowledgment We appreciate the comments and feedback given by Ali Choudhary, Moinuddin, Amin Lodhi and participants of a seminar in which this paper was presented.
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Date of creation: May 2010
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informal economy; Pakistan; South Asia; ARDL; MIMIC;
Other versions of this item:
- E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-29 (All new papers)
- NEP-CWA-2010-05-29 (Central & Western Asia)
- NEP-DEV-2010-05-29 (Development)
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Democracy and Development in Pakistan: Where are we headed?
by Jesse Neugarten in Blogal Prosperity on 2014-06-24 18:52:38
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