THE IMPACT OF THE HIDDEN ECONOMY ON FINANCIAL STABILITY AND ECONOMIC POLICIES

Abstract

The hidden economy is one of the dangerous economic phenomena that threatens countries of the world, especially developing countries, because this economy constitutes a large percentage of the gross domestic product in those countries. The reasons for the emergence of the hidden economy varied between local reasons and international reasons, and the methods and approaches for estimating the hidden economy varied, including direct measurement methods and indirect measurement methods. This research aims to know the impact of the hidden economy on output fluctuations, as it is the most important macroeconomic fluctuation in Iraq, in addition to important regulatory variables that included financial and commercial integration, monetary and financial policy, and financial development using some statistical methods that included stability tests for the data, and a stability test for the estimated parameters to test the extent of the possibility of existence A relationship between the hidden economy, financial stability, and economic policies. The research relied on the contemporary hypothetical approach and tested the hypothesis of the effect of the hidden economy between the hidden economy, financial stability, and economic policies. The research reached results, the most important of which is the presence of a positive moral impact of the hidden economy (in addition to slowing output fluctuations for two years, fiscal policy, money supply, exchange rate, financial development, trade mergers, and crises) on financial and political fluctuations and stability in Iraq. Thus, the research supports the importance of reducing the hidden economy. To reduce financial, political, and economic stability fluctuations in Iraq. The research concluded with a set of recommendations, the most important of which is adopting a formula for economic treatments and controls and activating laws to provide an effective economic climate