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A fuzzy logic approach to modeling the Underground economy in Iran
oleh: Ali Ghanbari, Seyed Hadi Makhzan Moosavi
Format: | Article |
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Diterbitkan: | Allameh Tabataba'i University Press 2011-09-01 |
Deskripsi
The size of the underground economy (UE) is valuable information in the formulation of macroeconomic and fiscal policy. According to the hidden nature of underground economy, there will be a problem for studying and measuring it, therefore methods of common measure have set about estimating these activities so that it will face with exclusive assumptions. This study applies fuzzy set theory and fuzzy logic to construct an annual time-series for the (unobservable) Iran UE over the period 19782006. Three major factors affecting the size of the UE, the effective tax rate, unemployment rate and the degree of government regulations, are used. The result of this study has been compared with MMIC model. Although these two studies have different procedures, they have generally defensive and almost similar results in underground economy. In the meanwhile the featured phenomenon of fuzzy values show that it can present better patterns in underground economy. The advantage of applying fuzzy logic is twofolds. First, it can avoid the complex calculations in conventional econometric models. Second, fuzzy rules with linguistic terms are easy for human to understand it.