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Yoke-Kee Eng and Chin-Yoong Wong
 
''A short note on business cycles of underground output: are they asymmetric?''
( 2008, Vol. 3 No.58 )
 
 
This short note as the first study investigates the symmetry of fluctuations of underground output around trend for four selected Southeast Asian countries, that is, Malaysia, Indonesia, Thailand, and Philippines, over the time horizon of 1970-2006. In particular, we test if the underground output falls below trend more drastically and severely at shorter time span than when rising above trend. We find no evidence that supports this hypothesis. We thus conclude that asymmetry in fluctuations around trend is not a primary concern in understanding the nature of underground economy. We suggest that the symmetry of fluctuation of underground output, in conjunction with the potential complementary effect on market consumption, may account for the widely documented expansionary fiscal contraction in developing countries.
 
 
Keywords: Underground economy
JEL: C2 - Single Equation Models; Single Variables: General
E3 - Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data)
 
Manuscript Received : Aug 22 2008 Manuscript Accepted : Sep 17 2008

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