Underground activities affect crucial fiscal ratios generating “gaps” both in government revenues and in national accounts. I address this topic exploiting the peculiarities of the Italian situation. First, I describe the pros and cons of the Italian method to estimate the (non trivial share of) shadow economy. This sheds some light on the reliability of GDP estimates and allows unraveling some policy-relevant national accounts gaps. Second, I examine the links between undeclared incomes, tax burden and fiscal policy in a system possibly suffering from unpleasant arithmetic. Data suggest that government revenues and tax evasion go hand-in-hand and highlight the difficulties of policymaking.
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Paper provided by ISAE - Institute for Studies and Economic Analyses - (Rome, ITALY) in its series ISAE Working Papers with number
76.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Tito Boeri & Pietro Garibaldi, 2005.
"Shadow Sorting,"
NBER Chapters,
in: NBER International Seminar on Macroeconomics 2005
National Bureau of Economic Research, Inc.
[Downloadable!]
Slemrod, Joel & Yitzhaki, Shlomo, 2002.
"Tax avoidance, evasion, and administration,"
Handbook of Public Economics,
in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 22, pages 1423-1470
Elsevier.
[Downloadable!] (restricted)
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