Size,trend, and policy implications of the underground economy |
| |
| Institution: | 1. Dipartimento di Scienze Economiche, Università di Bologna, Piazza Scaravilli 2, 40126 Bologna, Italy;2. Departamento de Fundamentos del Anàlisis Económico, Universidad de Alicante, 03071 Alicante, Spain;1. Università Napoli Parthenope, Italy;2. Università Milano-Bicocca, Italy;1. Deakin University, Australia;2. IMF, USA;3. Research Division, Federal Reserve Bank of St. Louis, University of Notre Dame, PO Box 442, St. Louis, MO 63166-0442, USA;1. Institute of Agricultural Economics and Development, Chinese Academy of Agricultural Sciences, Beijing, 100083, China;2. School of Economics, JiNan University, Guangzhou, 510632, China;3. School of Economics and Management, Nanjing University of Information Science and Technology, Nanjing, 210044, China;1. Inter-American Development Bank, United States;2. Instituto Tecnológico Autónomo de México, Mexico |
| |
| Abstract: | We study the underground economy within a dynamic and stochastic general equilibrium framework. Our model combines limited tax enforcement with an otherwise standard two-sector neoclassical stochastic growth model. The Bayesian estimation of the model based on Italian data provides evidence in favor of an important underground sector in Italy, with a size that has increased steadily over the whole sample period. We show that this pattern is due to a steady increase in taxation. Fiscal policy experiments suggest that a moderate tax cut, along with a stronger effort in the monitoring process, causes a sizeable reduction in the size of the underground economy and provides a positive stimulus for the regular economy. Both of these effects jointly increase total fiscal revenues. |
| |
| Keywords: | DSGE Underground economy Tax evasion Bayesian estimation Italy |
| 本文献已被 ScienceDirect 等数据库收录！ |
|
