Saudi Multiple Indicators Multiple Causes (MIMIC) Model:
The MIMIC Model is a Structural Equation Model which takes into account the determinants of Shadow Economy (Informal Economy) represented in the Shadow Economy’s causes and indicators. The Model determines the size of the shadow economy as a percentage of the Nominal Gross Domestic Product (GDP) and provides Med/Long term forecasts of the size of the shadow economy of Saudi Arabia. It could disaggregate the shadow economy into two parts, One is accounted for in the GDP and the other is not accounted for depending on the method of estimating the GDP.
The Cause and Indicator Variables of this MIMIC Model are as follows:
- T/Y : Total Private Sector Tax (T) / Total Nominal GDP (Y)
- F: Financial Sector Development Index = Value Added of Financial Sector / Value Added of Energy and Utility Sector.
- S/LF: Self Employment(S)/Total Labour Force (LF)
- U: Saudi Unemployment Rate
- C/M2: Currency Demand (C) / Broad Money including timed deposits (M2)
- R/W: Total Workers Transfers (R) / Total Wages in Private Sector (W).
Main Use:
*Estimating and Forecasting the Size Shadow Economy of Saudi (within the formal and informal economy) and any shadow / uncaptured economic activity based on the data availability
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