Journal of Econometric Modelling

Journal of Econometric Modelling

Investigating the impact of the informal economy on the ecological footprint in Iran

Document Type : Original Article

Authors
Bakhtiar Javaheri 1
Parvin Ali Moradi Afshar 2
Fatemeh Babakhani 3
Mohammad Parsa Ehterami 4
1 Associate Professor of Economics, Department of Economics, Faculty of Humanities and Social Sciences, University of Kurdistan
2 Assistant Professor of Economics, Department of Economics, Faculty of Humanities and Social Sciences, University of Kurdistan
3 Master of Arts in Economics, Department of Economics, Faculty of Humanities and Social Sciences, University of Kurdistan
4 PhD Candidate in Economics, Department of Economics, Faculty of Humanities and Social Sciences, University of Kurdistan
10.22075/jem.2026.40627.2072
Abstract
The aim of this study is to investigate the impact of the informal economy on the ecological footprint in Iran from 1990 to 2020. The Structural Vector Autoregression (SVAR) method is used to analyze dynamic relationships among variables. Estimation results show that the informal economy has a negative and significant effect on the ecological footprint, meaning that its recent decline has reduced environmental pressures. Trade openness, urbanization, industrialization, and economic growth have positive and significant effects on the ecological footprint. However, the squared term of economic growth shows a negative effect, supporting the Environmental Kuznets Curve hypothesis. Impulse response functions and variance decomposition confirm the long-term findings. In conclusion, controlling informal activities and implementing sustainable development policies can effectively help reduce environmental degradation in Iran.
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Keywords
Ecological Footprint
Informal Economy
SVAR Model
Environmental Degradation
Iran