Open Access Peer-reviewed Research Article

Investigating and estimating the size of Shadow Economy by using monetary approach: Case study of Malaysia

Main Article Content

Yousaf Ali Khan corresponding author


The purpose of this study is to explore and estimate the size of Shadow Economy of Malaysia. This study used annual Time series data from 1980 to 2018, introduced Lending Interest Rate as additional variable for the first time to estimate the Shadow or dim Economy, and focused on the Currency Demand Approach (CDA) which is the best way of estimation the size of S.E. The results of ARDL, Unit Root Test (ADF) and Bound Test have also generated for the purpose. And this study investigated positive relationship between Currency Circulation to Money Supply Ratio and GDP, Inflation, Interest rate, and Total Tax Revenue through ARDL and estimated the required Shadow Economy, and also explored the Shadow Economy of Malaysia and estimated the size of S.E. Size of tax evasion community has also derived by present research which represent that taxes are not the only measures of Shadow Economy.

Shadow Economy, ARDL, interest rate, GDP, currency, demand approach

Article Details

How to Cite
Khan, Y. A. (2022). Investigating and estimating the size of Shadow Economy by using monetary approach: Case study of Malaysia. Frontiers in Management and Business, 3(2), 219-226.


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