The Shadow Economy and the Impact of Exchange Rate Uncertainty on it (Iran)

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Seyed Kamal Sadeghi, Zubaida Ibrhim, Jawad Alsaati


Part of the country's economic activity is related to the shadow economy, which is not recorded in national accounts. Various factors affect the shadow economy. In this study, after calculating the exchange rate uncertainty index using the conditional heterogeneous variance model, it was examined along with other explanatory variables of the shadow economy in Iran during the years (19762016). The results of estimating the ninth model showed that the exchange rate uncertainty index has a positive and significant effect on the shadow economy index in Iran. There is also a significant negative relationship between real production growth and the shadow economy.

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