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Exploring the Nexus Between the Shadow Economy, Finance, and Economic Growth in Tunisia: Asymmetric NARDL Model

Author

Listed:
  • Chokri Terzi

    (Faculty of Economic Sciences and Management of Nabeul and LEGI, EPT, Carthage University, Tunisia)

  • Khalil Mhadhbi

    (Faculty of Economic Sciences and Management of Nabeul, Carthage University, Tunisia)

  • Faouzi Abdennour

    (Faculty of Economic Sciences and Management of Nabeul, Carthage University, Tunisia)

Abstract

This study aimed to assess the effect of the shadow economy on the finance-growth relationship in Tunisia over the period 1984-2020. The authors used a nonlinear autoregressive distributed lags (NARDL) model to verify the impact of the informal economy as measured by Tanzi's method on the finance-growth relationship. The results suggest that in the long term, with a positive change at the level of the shadow economy, the effect of financial development on growth becomes negative. The opposite is also true. However, in the short run, asymmetric effect of the shadow economy is only detected on economic growth and not on the financial development-economic growth nexus. Indeed, the level of the informal economy has an important role in the Tunisian economy. The significant and positive impact of financial development on the economy is strongly influenced by the size of the informal economy.

Suggested Citation

  • Chokri Terzi & Khalil Mhadhbi & Faouzi Abdennour, 2023. "Exploring the Nexus Between the Shadow Economy, Finance, and Economic Growth in Tunisia: Asymmetric NARDL Model," International Journal of Business Analytics (IJBAN), IGI Global Scientific Publishing, vol. 10(1), pages 1-13, January.
    • Handle: RePEc:igg:jban00:v:10:y:2023:i:1:p:1-13
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    References listed on IDEAS

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