Estimating the influencing factors on the volume of the underground economy using fuzzy logic

Vasheghani, Javad; Zandi, Fateme; Afshari Rad, Majid; Khazri, Mohammad

doi:10.22075/ijnaa.2023.31069.4557

Estimating the influencing factors on the volume of the underground economy using fuzzy logic

Document Type : Research Paper

Authors

Javad Vasheghani ¹

Fateme Zandi ¹

Majid Afshari Rad ²

Mohammad Khazri ¹

¹ Department of Economics, South Tehran Branch, Islamic Azad University, Tehran, Iran

² Department of Economics, Kharazmi University, Tehran, Iran

10.22075/ijnaa.2023.31069.4557

Abstract

The aim of this research was to estimate the influencing factors on the size of the underground economy using fuzzy logic. The illegal nature of the underground economy also limits private investment and economic growth. For example, companies that operate in the underground economy are not able to use the institutions that support the market economy (judiciary and courts), which makes them less inclined to invest. Therefore, it can be said that one of the most important issues that should be considered in economic policies is the underground sector of the economy. The research method in this research is of a descriptive-survey type, and the type of research in the current research is causal and practical in terms of the purpose, because the expected results of the research can be used in examining the dimensions of the underground economy. It is used in university and economic resources. To estimate the index of the underground economy and examine its trend using fuzzy logic, it is necessary to perform these steps; Accurate determination of indicators, fuzzification, definition of basic rules, inference engine, determinism and sensitivity analysis. To estimate the index of the underground economy with fuzzy logic, they are divided into three sub-criteria including the financial sector, the monetary sector and the real sector. The results showed that the informal sector constitutes an important part of the economy and the labor market in developing countries. This sector plays a major role in production, creating employment and income by producing goods and services, transferring skills by newcomers to the sector, reducing unemployment and using individual capital.

Keywords

underground economy

exchange rate

tax

economic size

structural equation modeling

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