Estimating the size of the underground economy in the UAE: Evidence from Gregory-Hansen cointegration based currency demand approach

• Main Authors: Mohammed Gamal, Awadh Ahmed, Dahalan, Jauhari
• Format: Article
• Language: English
• Published: Society of Interdisciplinary Business Research 2015
• Subjects: HC Economic History and Conditions
• Online Access: http://repo.uum.edu.my/15498/1/riber_b15-187_183-206.pdf; http://repo.uum.edu.my/15498/; http://www.sibresearch.org/uploads/2/7/9/9/2799227/riber_b15-187_183-206.pdf
• Institution: Universiti Utara Malaysia

The paper estimates the size of the underground economy and tax evasion in the UAE over the period of 1991:1-2010:4. The study based on currency demand approach model as a proxy to measure the underground economy.The results indicate that the size of the underground economy in the UAE grew significantly on average of 10.34% of the GDP over the study period. The rate of tax evasion on the non-oil tax revenues reached, on average, 10.34% over the study period. Nevertheless, the rate of tax evasion to the GDP remained, on average, at its lowest level at 0.63%.