Measuring Underground Economy of Bangladesh: Transaction Approach

Underground economy is a malaise for the government that restricts its fiscal ability and infuses confusion in development planning. For a developing country like Bangladesh, which thrives for prospering this can hurt disproportionately. Therefore, measuring underground economy is important for Bangladesh. In this study, using data of 1980-2010 we have used transaction method proposed by Feige (1979) to calculate its extent in Bangladesh. We have found that unreported economy accounts a substantial portion of official GDP. Its growth rate was high positive in some years and in some other years it experienced a stagnant trend. Although few but in some years it declined relative to GDP as well.