The Shadow Economy and Economic Growth: A Case Study of Pakistan
Author: Rahim Ullah

The present study is aimed to explore the relationship between shadow economy and economic growth in Pakistan. The study uses Autoregressive Distributed lag model (ARDL) on yearly data from 1973 to 2018. The core variables are the shadow economy and GDP per capital of Pakistan, while the investment and education variables are used as the control variable in the model. The result for present study can be summarized as in short run study has found significant impact of education and shadow economy. In long run both variables have sustained their impact, with different sign. In conclusion, the study has found negative impact of shadow economy on economic growth for Pakistan. On the comparison of different regimes, the trends in shadow economy indicate that the first military regime keep its size stable and lower than the democratic regime of 1990s. The second phase of military regime also bitterly perform to reduce the size of shadow economy compare to democratic regime after 2008. In recommendation the findings of the current study suggest that government should impose taxes on agriculture sector. Supervisor:- Dr. Karim Khan

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Supervisor: Karim Khan

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