An econometric analysis of the underground economy and tax evasion in Kuwait Online publication date: Mon, 17-Aug-2020
by Awadh Ahmed Mohammed Gamal; Jauhari Dahalan; K. Kuperan Viswanathan
International Journal of Business and Globalisation (IJBG), Vol. 25, No. 3, 2020
Abstract: Up to now, no individual study on Kuwait with respect to the underground economy and tax evasion has been conducted using the recent adjusted form of currency demand function model (CDFM) before. This paper estimates the size of underground economy behind tax evasion from 1991: Q1 to 2010: Q4. It applies the Zivot-Andrews (ZA) procedure for the stationarity analysis, and Gregory-Hansen (GH) long run cointegrating technique for estimating the underground economy based on the adjusted currency demand function approach. While the general-to-specific technique is used to estimate the short-run error correction model. Toda-Yamamoto test is also used to explore the causal relationship between the underground economy and the non-oil tax revenues' variable. It finds that the averaged sizes of the underground economy and the tax evasion to the official gross domestic product (GDP) in Kuwait constituted about 24.95%, and 2.83% respectively.
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Business and Globalisation (IJBG):
Login with your Inderscience username and password:
Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.
If you still need assistance, please email subs@inderscience.com
Our Blog 
Follow us on Twitter 
Visit us on Facebook