What type of economy exists parallel to the official economy but is not reported to the government?

The term that describes an economy existing alongside the official economy but not reported to the government is the underground economy. This encompasses all economic activities that are not captured by official statistics and regulatory frameworks, including unreported income, illegal trade, and informal labor.

The underground economy can thrive for various reasons, such as the desire to avoid taxation, evade government regulation, or operate outside legal restrictions. By not being accounted for in official economic measures, it presents challenges for policymakers and economists trying to gauge the true state of the economy.

Understanding the underground economy is crucial as it has significant implications for economic policy, taxation, and social services. It demonstrates how certain segments of economic activity can elude government scrutiny, emphasizing the need for effective regulatory and compliance measures.