The Impact of Financial Development on Shadow Economy in Iran: Tests for Cointegration with Structural Break

Document Type : Research Paper

Authors

1 Assistant Professor, Department of Economics, Urmia University

2 Graduated from Economics, Urmia University

Abstract

This paper employs data for the period 1974 to 2013 to examine the impact of financial development on the size of shadow economy in Iran. Zivot-Andrews unit root test were used to test for variables stationary and  we used Saikkonen and Lutkepohl test for co-integration between the variables that emphasized structural break in variables. According to the cointegration test results, this paper used the dynamic OLS method developed by Stock and Watson for estimation long- run relationship between model variables. The results show that the financial development has negative and significant effect on the shadow economy in Iran and reduce the size of shadow economy. Also GDP per capita and openness have negative effect on Shadow economy and the population and inflation have positive effects on the Shadow economy in Iran.
JEL Classification: C32, E26, G32

Keywords

References

پیرایی، خسرو و رجایی، حسینعلی (1394). اندازه‌گیری اقتصاد زیرزمینی در ایران و بررسی علل و آثار آن. فصلنامه­ی سیاست­های راهبردی و کلان، 3(9): 42-21 .
جعفری صمیمی، احمد و اکبری، محسن (1392). بررسی عوامل مؤثر بر اقتصاد زیرزمینی در ایران (1357-1388). اولین همایش الکترونیکی ملی چشم­انداز اقتصاد ایران با رویکرد حمایت از تولید ملی، آذرماه، دانشگاه آزاد اسلامی واحد خوراسگان، اصفهان.
صمدی، علی­حسین و پهلوانی، مصیب (1388) .همجمعی و شکست ساختاری در اقتصاد. انتشارات دانشگاه سیستان ­و بلوچستان و نور علم، همدان.
علیزاده، هانیه و غفاری، فرهاد (1392). برآورد اندازه‌ی اقتصاد زیرزمینی در ایران و بررسی عوامل مؤثر بر آن. فصلنامه‌ی اقتصاد مالی و توسعه، 7(25): 69-31.
فلاحتی، علی، نظیفی، مینو و عباسپور، سحر (1391). مدل­سازی  اقتصاد سایه­ای و تخمین فرار مالیاتی در ایران با استفاده از شبکه‌ی عصبی مصنوعی. فصلنامه‌ی تحقیقات توسعه‌ی اقتصادی، 6: 33-58.
منظور، داوود و نوری اینانلو، علی (1384). تخمین تابع تقاضای انرژی خانگی در ایران: رویکرد حداقل مربعات پویا. فصلنامه‌ی پژوهشی دانشگاه امام صادق (ع)، 27: 7-21.
Al-Azzam, A., & Hawdon, D. (1999). Estimating the Demand for Energy in Jordan: A Stock-Watson Dynamic OLS (DOLS) Approach. University of Surrey, Joly 1999: 1-16.
Berdiev, A.N., & Saunoris, J.W. (2016). Financial development and the shadow economy: A panel VAR analysis. Economic Modelling 57: 197–207.
Blackburn, K., Bosey, N., & Capasso, S. (2008). Financial Development and the Underground Economy. Working Paper 5:1-17.
Blackburn, K., Bosey, N., & Capasso, S. (2012). Tax evasion, the underground economy and financial development. Journal of Economic Behavior & Organization 83: 243– 253.
Bose, N., Capasso,S., & Wurm, M. (2008). The Impact of Banking Development on the Size of the Shadow Economy. Working Paper  207, October (2008) : 1-23.
Capass, S., & Jappelli, T. (2013). Financial development and the underground economy. Journal of Development Economics 101: 167–178.
Elgin, C.,&  Oztunal, O. (2012). Shadow Economies around the World: Model Based Estimates. Journal of Economic Behavior & Organization 83:243– 253.    
Gobbi, G., & Zizza, R. (2007). Does the Underground Economy Hold Back Financial Deepening? Evidence from the Italian Credit Mark. CEP Discussion Paper 789: 2-34.
Hosseini, A., Nasrollahi, Z., & Abtahi, S.Y. (2014). Estimation of underground economy in Iran and its relationship with financial development: application ARDL. Journal of Novel Applied Sciences, ©2015 JNAS Journal-2014-4-3:360-370.
Lütkepohl, H., Saikkonen, P., & Trenkler, C. (2003). Comparison of Tests for the Cointegrating Rank of a VAR Process with a Structural Shift. Journal of Econometrics, 113 (2), 201-229.
Schneider, F., & Enste, D. (2000). Shadow economies: size, causes, and consequences. J. Econ. Lit. 38:77–114.
Schneider, F. (2010). The Influence of Public Institutions on the Shadow Economy: An Empirical Investigation for OECD Countries. Review of Law and Economics 6: 113–140.
Schneider, F. (2004). Shadow Economies around the World: What Do We Know?. Discussion Paper 1043: 1-57.
Schneider, F. (2006). Shadow Economies and Corruption All Over the World: What Do We Really Know? . Discussion Paper 2315, 1-65.
Schneider, F. (2007). Shadow Economies and Corruption all Over the World: New Estimatesfor 145 Countries. Economics: The Open-Access. Open-Assessment E-Journa 1, 2007–2009: 1-53.
Stock, J. H., & Watson, M.W. (1993). A Simple Estimater of Cointegrating Vectors in Higher Order Integrated System. Econometrica, 61(4): 783-820.
Zaman, G., & Goschin, Z. (2015). Shadow economy and economic growth in Romania. Cons and pros. Procedia Economics and Finance 22, 80 – 87.
Journal of Economic Research (Tahghighat- E- Eghtesadi)
Volume 52, Issue 3 - Serial Number 120
October 2017
Pages 619-639

Files

History

  • Receive Date: 29 June 2016
  • Revise Date: 02 May 2017
  • Accept Date: 23 May 2017

Share

How to cite

Statistics