Examining the Effective Social and Economic Factors on Underground Economy

FiroozAbadi, Somayeh Rasouli; Razmi, Seyed Mohammad Javad; Bahmani, Mohsen Noghani Dokht

doi:10.5901/mjss.2015.v6n3p525

Cited by 1 publication

(2 citation statements)

References 26 publications

(17 reference statements)

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“…The latter is also considered a safety net in the context of developing countries if the government does not provide any form of unemployment benefits. Firoozabadi et al show in their case study of the province Sistan and Baluchistan how unemployment pushes people into the informal economy [54]. However, our result for unemployment is not robust to the inclusion of other control variables such as the value added of different economic sectors.…”

Section: Resultscontrasting

confidence: 77%

“…They use the latter to provide shadow economy estimates for many countries worldwide, including estimations for Iran. Several Iranian researchers have used the mentioned methods as well to determine the size of the shadow economy in the country [52][53][54][55]. A comprehensive study on the effects of international sanctions on Iran's informal economy comes from Farzanegan, in which he discusses important transmission channels of financial and energy sanctions, mainly through the foreign exchange markets [15].…”

Section: Literature Reviewmentioning

confidence: 99%

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Lifting of International Sanctions and the Shadow Economy in Iran—A View from Outer Space

Farzanegan

Fischer

2021

Remote Sensing

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With the implementation of the Joint Comprehensive Plan of Action (JCPOA) in 2016, Iran experienced a short period without international sanctions which resulted in an annual increase in the gross domestic product (GDP) in the following two years. However, it was not just the formal economy that was affected by the sanctions. Previous studies have shown that sanctions can negatively affect the shadow (or informal) economy and may even have a larger impact on the informal economy than on the formal economy. Nighttime lights (NTL) data allow us to study shadow economy activities that are not reported in the official GDP. This study uses a panel of NTL (the DMSP/OLS and VIIRS/DNB harmonized dataset) from 1992 to 2018 for 31 Iranian provinces to investigate the association between the lifting of sanctions and the growth of the shadow economy. The empirical results suggest an increase in shadow economy activity with the lifting of sanctions while controlling for other drivers of informal activities.

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Section: Resultscontrasting

confidence: 77%

Section: Literature Reviewmentioning

confidence: 99%