Author(s): Mohammad Kamal Abuamsha, Suhair Ibrahim Shumali
The aim of this paper is to shed light on the shadow economy in the Palestinian Territories from 2008 to 2018, which mostly concentrates on the statistical relationships between the shadow economy and other numerical factors. Examining the Palestinian Territories shadow economy and its relationship with the Palestinian Financial Economic indexes (PFEI) in Palestinian Territories, and it’s also important to know the effect of shadow economy and its relationship with (PFEI) on the GDP of the country as a whole (including tax evasion, and money laundry). Our Research is designed by using the Monetary Model to Calculate the Shadow Economy. It is observed that quarterly average of the size of shadow economy during the research period has reached $1560 in millions with approx. 56.7% of GDP with relation with exchanged indexes, which severely affect the mainstream economy by shadow economy, tax and money laundering. The shadow economy, tax, and money laundering affected up to 25% economy. Policies framed by policymaker and economic policy designers had a critical impact on GDP by shadow economy to achieve their desired goals. Hence, this will suggest reforms to reduce shadow economy in their country. The research paper can be used as a guide as all the values are calculated from the (PFEI) derived from PALESTINIAN TERRITORIES (ISSUED BY PMA). Assurance on the data is highly considerable.