Assessment of the shadow economy and tax evasion in RA

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This article aimed to assess the shadow economy and tax evasion in Armenia based on the indirect method of Currency Demand Approach (CDA). As the macroeconomic indicators in our analysis are not stationary at the same degree, we have used the autoregressive distributed lag (ARDL) models and the results of the co-integration test showed that there is a co-integration between the model variables, therefore it is possible to use the CDA. In the model have been used monthly data during the 2013-2023 period. We can conclude that the CDA method can be considered to be an appropriate method for measuring the shadow economy and tax evasion in the RA’s economy. The results of the research show that during the observed years the level of the shadow economy and tax evasion are decreasing, which means that government is increasingly recognizes the importance to constrain the shadow economy given its connection to issues such as loss of tax revenues.