The Underground Economy: Estimation, and Economic and Policy Implications: The Case of Pakistan
October 1, 1995
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Summary
This paper estimates the size of the underground economy in Pakistan and analyzes its impact on Government fiscal position and the allocation of economic resources in the national economy. The results suggest that there is a mutual dependency between the size of the underground economy and fiscal deficits, and show a leakage from the national income-expenditure cycle in the formal economy to the underground economy via private investments. Finally, the paper proposes long- and short-run policies to reduce the size of the underground economy.
Subject: Budget planning and preparation, Currencies, Government debt management, Income, Money, National accounts, Private investment, Public financial management (PFM)
Keywords: Budget planning and preparation, causality equation, Currencies, currency demand, D ratio, deficit-UE cycle, formal GDP, GDP deflator, Government debt management, import UEA, Income, integration equation, Private investment, WP
Pages:
23
Volume:
1995
DOI:
Issue:
101
Series:
Working Paper No. 1995/101
Stock No:
WPIEA1011995
ISBN:
9781451852479
ISSN:
1018-5941
