The underground economy of Iran

The underground economy is a phenomenon that all countries in the world are struggling with. Estimates in most countries suggest a considerable size of production activities in the subset of the underground economy. Many social and economic anomalies are rooted in underground economic activity. As a result, estimating this part of the economy is of a high importance regarding identifying the tax gap, the effectiveness of monetary and fiscal policies, economic growth and income distribution. Underground activities are usually carried out using cash in order to stay hidden from the government and to getting recorded for tax evasion. This study was conducted aimed at estimating the size of Iran's underground economy and investigating the factors affecting it using the cash flow measurement method.