THE IMPACT OF THE SHADOW ECONOMY ON MACROECONOMIC STABILITY: THE CASE OF UZBEKISTAN
Keywords:
shadow economy, macroeconomic stability, fiscal policy, inflation, informal employment, tax evasion, monetary transmission.Abstract
This paper investigates the impact of the shadow economy on macroeconomic stability in Uzbekistan. The informal sector, which constitutes over one-third of GDP, poses significant challenges to fiscal and monetary policy. Using a mixed-method approach, the study analyses statistical data and policy documents from 2010 to 2024. Regression analysis reveals a negative correlation between shadow economic activity and tax revenue, inflation control, and monetary transmission effectiveness. The findings suggest that informal transactions reduce fiscal capacity and distort official economic indicators. Despite recent reforms, informal employment and cash-based trade remain prevalent. The study highlights the need for improved tax administration, digitalisation, and financial inclusion. Reducing the shadow economy is essential for enhancing macroeconomic governance and long-term development.
References
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