Document Type : Research Paper

Authors

• Malihe Khajavi
• Ebrahim Rezaei
• Hassan Khodavaisi

Abstract

We can define money-laundering as concealing the money acquired from the process of criminal economic activity that its root may be legal (like tax evasion) or its base may be illegal (such as drug-dealing or human trafficking). At the moment, law-makers are facing many challenges regarding these criminal activities all around the world. In this paper we try, as a first attempt, to estimate the amount of dirty money in the Iranian economy by using the unobservable variable approach which barrowed from Khajavi et al(2010). In this paper we removed many restricted assumption, applied by previous researches, and in this way we get new estimate of the illegal money in the economy of Iran during 1352-1386. Our results show that there is positive relationship between illegal money, on the one hand, and underground economy plus demand for money, on the other hand.  We suggest that economic policy-makers should watch this relationship much more carefully.

Keywords

• Money-laundering
• dirty money
• Underground Economy
• batahacharia method
• bound testing approach