Estimating the Volume of the Hidden Economy in Yemen, 1995-2009: Evidence from ARDL Approach of Cointegration

Estimating the Volume of the Hidden Economy in Yemen, 1995-2009: Evidence from ARDL Approach of Cointegration

Knowing the size of the hidden economic activities is very important for economists as well as policy makers for economic development and planning. The expansion of the activities in hidden economy has become a competing economy with the official activities. This study aims to shed light on the hidd...

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Main Author: Gamal, Awadh Ahmed Mohammed
Format: Thesis
Language:eng
eng
Published: 2012
Subjects:
HD Industries
Land use
Labor.
Online Access:https://etd.uum.edu.my/3206/1/AWADH_AHMED_MOHAMMED_GAMAL.pdf
https://etd.uum.edu.my/3206/4/AWADH_AHMED_MOHAMMED_GAMAL.pdf
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id my-uum-etd.3206
record_format uketd_dc
institution Universiti Utara Malaysia
collection UUM ETD
language eng
eng
advisor Dahalan, Jauhari
topic HD Industries
Land use
Labor.
spellingShingle HD Industries
Land use
Labor.
Gamal, Awadh Ahmed Mohammed
Estimating the Volume of the Hidden Economy in Yemen, 1995-2009: Evidence from ARDL Approach of Cointegration
description Knowing the size of the hidden economic activities is very important for economists as well as policy makers for economic development and planning. The expansion of the activities in hidden economy has become a competing economy with the official activities. This study aims to shed light on the hidden economy’s phenomena in Yemen as a one of the least developing countries. It attempts to measure the size of the hidden economy based on the size of tax evasion by measuring the currency in circulation and the ratio of newly-printed banknotes to the public expenditure. The study uses quarterly data over the period of 1995Q1 to 2009Q4. In this study, the ratio of newly-printed banknotes to the public expenditures which are issued increasingly by monetary authorities over the period are as indicative a wrong monetary policies in Yemen. The study investigates whether there is a long- run relationship in the money demand function which is used as a measurement of the Yemen’s hidden economy. The ARDL bound testing approach for cointegration test is adopted in this study. The empirical results show that there is a unique and stable long-run relationship among currency in circulation and its determinants, which indicates a growing activities of hidden economy in Yemen. It confirmed that the growing of the hidden economy is associated with the weakness in the tax system and corruption in Yemen. The average volume of the hidden economy related to the official GDP has grown steadily from 78.25% in 1995 to 94.1% in 2009. The results also reveal that after incorporating the CUSUM and CUSUMSQ tests, the Yemen’s money demand function is stable between 1995:1 and 2009:4.
format Thesis
qualification_name masters
qualification_level Master's degree
author Gamal, Awadh Ahmed Mohammed
author_facet Gamal, Awadh Ahmed Mohammed
author_sort Gamal, Awadh Ahmed Mohammed
title Estimating the Volume of the Hidden Economy in Yemen, 1995-2009: Evidence from ARDL Approach of Cointegration
title_short Estimating the Volume of the Hidden Economy in Yemen, 1995-2009: Evidence from ARDL Approach of Cointegration
title_full Estimating the Volume of the Hidden Economy in Yemen, 1995-2009: Evidence from ARDL Approach of Cointegration
title_fullStr Estimating the Volume of the Hidden Economy in Yemen, 1995-2009: Evidence from ARDL Approach of Cointegration
title_full_unstemmed Estimating the Volume of the Hidden Economy in Yemen, 1995-2009: Evidence from ARDL Approach of Cointegration
title_sort estimating the volume of the hidden economy in yemen, 1995-2009: evidence from ardl approach of cointegration
granting_institution Universiti Utara Malaysia
granting_department Othman Yeop Abdullah Graduate School of Business
publishDate 2012
url https://etd.uum.edu.my/3206/1/AWADH_AHMED_MOHAMMED_GAMAL.pdf
https://etd.uum.edu.my/3206/4/AWADH_AHMED_MOHAMMED_GAMAL.pdf
_version_ 1747827520595558400
spelling my-uum-etd.32062016-04-19T04:24:07Z Estimating the Volume of the Hidden Economy in Yemen, 1995-2009: Evidence from ARDL Approach of Cointegration 2012-06 Gamal, Awadh Ahmed Mohammed Dahalan, Jauhari Othman Yeop Abdullah Graduate School of Business Othman Yeop Abdullah Graduate School of Business HD Industries. Land use. Labor. Knowing the size of the hidden economic activities is very important for economists as well as policy makers for economic development and planning. The expansion of the activities in hidden economy has become a competing economy with the official activities. This study aims to shed light on the hidden economy’s phenomena in Yemen as a one of the least developing countries. It attempts to measure the size of the hidden economy based on the size of tax evasion by measuring the currency in circulation and the ratio of newly-printed banknotes to the public expenditure. The study uses quarterly data over the period of 1995Q1 to 2009Q4. In this study, the ratio of newly-printed banknotes to the public expenditures which are issued increasingly by monetary authorities over the period are as indicative a wrong monetary policies in Yemen. The study investigates whether there is a long- run relationship in the money demand function which is used as a measurement of the Yemen’s hidden economy. The ARDL bound testing approach for cointegration test is adopted in this study. The empirical results show that there is a unique and stable long-run relationship among currency in circulation and its determinants, which indicates a growing activities of hidden economy in Yemen. It confirmed that the growing of the hidden economy is associated with the weakness in the tax system and corruption in Yemen. The average volume of the hidden economy related to the official GDP has grown steadily from 78.25% in 1995 to 94.1% in 2009. The results also reveal that after incorporating the CUSUM and CUSUMSQ tests, the Yemen’s money demand function is stable between 1995:1 and 2009:4. 2012-06 Thesis https://etd.uum.edu.my/3206/ https://etd.uum.edu.my/3206/1/AWADH_AHMED_MOHAMMED_GAMAL.pdf text eng validuser https://etd.uum.edu.my/3206/4/AWADH_AHMED_MOHAMMED_GAMAL.pdf text eng public masters masters Universiti Utara Malaysia AbdKarim,M.Z., & Guan,T.B. (2004). Stock prices, foreign opportunity cost, and money demand in Malaysia: A cointegration and error correction model approach.Journal economic Malaysia, 30(04),29-62. Abraham,A. (2009,December 22). Yemen suffers multi-billion dollar tax waste a year.Adal voice of Eritreans.Retrieved on Oct.23, 2011, from:http://adalvoice.wordpress.com/2009/12/21/ yemen-suffers-multi-billion-dollar-tax-waste-a- year. Ahmed,M., & Ahmed,Q.M.(1995). Estimation of the black economy of Pakistan through the monetary approach.Pakistan Development Review, 34(4), 791-807. 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