What is Hidden in the Hidden Economy of Pakistan? Size, Causes, Issues, and Implications
There is a worldwide contemporary debate about the role of the hidden economy in achieving the goal of sustained and inclusive economic growth and development, especially in the context of its spillover effects on the formal economy. For this purpose, policy-makers and academicians have made concerted efforts to estimate the size of the hidden economy and to analyse its causes, issues, and implications for key macroeconomic variables. However, there is a consensus among the policy-makers that a better macroeconomic policy formulation and its true implementation are subject to proper management of the associated issues of the hidden economy with suitable policy measures. In Pakistan, it is generally assumed that the hidden economy contributes about 30 percent to 50 percent to the overall GDP. The study investigates the potential determinants of the hidden economy and various interrelated socio-economic issues in the perspective of achieving the national goal of inclusive growth and development. Five statistical and structural modelling approaches are used to estimate the size of the hidden economy and to analyse the characteristic nature of its growth over time: the simple monetary approach, the modified monetary approach using dynamic ordinary least squares (DOLS), the multiple-indicators multiple-causes (MIMIC) approach, the electricity consumption approach, and the labour market survey approach. Policy implications are viewed in the context of the 18th Amendment and the 7th NFC Award in Pakistan.
Volume (Year): 49 (2010)
Issue (Month): 4 ()
|Contact details of provider:|| Postal: |
Web page: http://www.pide.org.pkEmail:
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- M. Ali Kemal, 2003. "Underground Economy and Tax Evasion in Pakistan A Critical Evaluation," PIDE-Working Papers 2003:184, Pakistan Institute of Development Economics.
- Phillip Cagan, 1958. "The Demand for Currency Relative to the Total Money Supply," Journal of Political Economy, University of Chicago Press, vol. 66, pages 303.
- Stock, James H & Watson, Mark W, 1993.
"A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems,"
Econometric Society, vol. 61(4), pages 783-820, July.
- James H. Stock & Mark W. Watson, 1991. "A simple estimator of cointegrating vectors in higher order integrated systems," Working Paper Series, Macroeconomic Issues 91-3, Federal Reserve Bank of Chicago.
- Tom Doan, . "SWDOLS: RATS procedure to estimate cointegrating vectors using dynamic OLS," Statistical Software Components RTS00207, Boston College Department of Economics.
- M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
- Friedrich Schneider & Dominik Enste, 2000.
"Shadow Economies Around the World; Size, Causes, and Consequences,"
IMF Working Papers
00/26, International Monetary Fund.
- Friedrich Schneider & Dominik Enste, 1999. "Shadow Economies Around the World - Size, Causes, and Consequences," CESifo Working Paper Series 196, CESifo Group Munich.
- Edgar L. Feige, 2004. "How Big IS the Irregular Economy?," Macroeconomics 0404005, EconWPA.
- Philip Cagan, 1958. "The Demand for Currency Relative to Total Money Supply," NBER Chapters, in: The Demand for Currency Relative to Total Money Supply, pages 1-37 National Bureau of Economic Research, Inc.
- Simon Johnson & Daniel Kaufman & Andrei Shleifer, 1997. "The Unofficial Economy in Transition," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(2), pages 159-240.
- Kemal, M. Ali, 2007.
"Fresh Assessment of the Underground Economy and Tax Evasion in Pakistan: Causes, Consequences, and Linkages with the Formal Economy,"
2226, University Library of Munich, Germany.
- M. Ali Kemal, 2007. "A Fresh Assessment of the Underground Economy and Tax Evasion in Pakistan: Causes, Consequences, and Linkages with the Formal Economy," PIDE-Working Papers 2007:13, Pakistan Institute of Development Economics.
- M. Ali Kemal, 2007. "A Fresh Assessment of the Underground Economy and Tax Evasion in Pakistan : Causes, Consequences, and Linkages with the Formal Economy," Microeconomics Working Papers 22200, East Asian Bureau of Economic Research.
- Arby, Muhammad Farooq & Malik, Muhammad Jahanzeb & Hanif, Muhammad Nadim, 2010.
"The size of informal economy in Pakistan,"
22617, University Library of Munich, Germany.
- Philip Cagan, 1958. "The Demand for Currency Relative to Total Money Supply," NBER Books, National Bureau of Economic Research, Inc, number caga58-1, May.
- Zafar Iqbal & Sarfraz Khan Qureshi & Riaz Mahmood, 1998. "The Underground Economy and Tax Evasion in Pakistan. A Fresh Assessment," PIDE-Working Papers 1998:158, Pakistan Institute of Development Economics.
- Yamada, Gustavo, 1996. "Urban Informal Employment and Self-Employment in Developing Countries: Theory and Evidence," Economic Development and Cultural Change, University of Chicago Press, vol. 44(2), pages 289-314, January.
- Ali Cheema & Lyyla Khalid & Manasa Patnam, 2008. "The Geography of Poverty: Evidence from the Punjab," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 13(Special E), pages 163-188, September.
- Kaufmann, Daniel & Kaliberda, Aleksander, 1996. "Integrating the unofficial economy into the dynamics of post-socialist economies : a framework of analysis and evidence," Policy Research Working Paper Series 1691, The World Bank.
- Mehnaz Ahmed & Qazi Masood Ahmed, 1995. "Estimation of the Black Economy of Pakistan through the Monetary Approach," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 34(4), pages 791-807.
- Tanzi, Vito, 1999. "Uses and Abuses of Estimates of the Underground Economy," Economic Journal, Royal Economic Society, vol. 109(456), pages F338-47, June.
- Bushra Yasmin & Hira Rauf, 2004. "Measuring the Underground Economy and its Impact on the Economy of Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 9(2), pages 93-103, Jul-Dec.
- Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
When requesting a correction, please mention this item's handle: RePEc:pid:journl:v:49:y:2010:i:4:p:665-704. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Khurram Iqbal)
If references are entirely missing, you can add them using this form.