The Learning Path of the Hidden Economy:Tax and Growth Effects in New Zealand
AbstractThis paper considers the "learning curve" relationship between the aggregate tax rate and the relative size of the hidden economy in New Zealand. Some simple non-linear models are estimated so that the effects of changes in the effective tax rate on the underground economy can be simulated. We find that over half of the hidden activity in New Zealand is a learned response to changing opportunities and constraints in fiscal policy, but this amount varies over the business cycle. A zero tax rate permits us to discover the "natural rate" of underground and criminal activity. Implications are drawn for taxation policy in that country.
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Bibliographic InfoPaper provided by Department of Economics, University of Victoria in its series Econometrics Working Papers with number 9805.
Length: 24 pages
Date of creation: 22 May 1998
Date of revision:
Note: ISSN 1485-6441. This is a revised version of N.Z. Inland Revenue Department Working Paper No. 21, December 1996.
Contact details of provider:
Postal: PO Box 1700, STN CSC, Victoria, BC, Canada, V8W 2Y2
Web page: http://web.uvic.ca/econ
More information through EDIRC
Hidden Economy; Underground Economy; Tax Evasion; Tax Gap;
Find related papers by JEL classification:
- C5 - Mathematical and Quantitative Methods - - Econometric Modeling
- H1 - Public Economics - - Structure and Scope of Government
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
This paper has been announced in the following NEP Reports:
- NEP-ALL-1998-09-07 (All new papers)
- NEP-EEC-1998-10-19 (European Economics)
- NEP-PBE-1998-09-07 (Public Economics)
- NEP-PUB-1998-09-07 (Public Finance)
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- David E.A. Giles, 1998.
"The Underground Economy: Minimizing the Size of Government,"
Econometrics Working Papers
9801, Department of Economics, University of Victoria.
- David E. A. Giles, 1998. "The Underground Economy: Minimizing the Size of Government," Econometrics Working Papers 9808, Department of Economics, University of Victoria.
- David E.A. Giles, 1998. "The Underground Economy: Minimizing the Size of Government," Department Discussion Papers 9801, Department of Economics, University of Victoria.
- David Giles & Lindsay Tedds & Gugsa Werkneh, 2002.
"The Canadian underground and measured economies: Granger causality results,"
Taylor & Francis Journals, vol. 34(18), pages 2347-2352.
- David E. A. Giles & Lindsay Tedds & Gugsa Werkneh, 1999. "The Canadian Underground and Measured Economies: Granger Causality Results," Econometrics Working Papers 9907, Department of Economics, University of Victoria.
- Giles, David E..A. & Tedds, Lindsay M. & Werkneh, Gugsa, 2002. "The Canadian Underground and Measured Economies: Granger Causality Results," MPRA Paper 39786, University Library of Munich, Germany.
- Lindsay M. Tedds & David E. A. Giles, 2000. "Modelling the Underground Economies in Canada and New Zealand: A Comparative Analysis," Econometrics Working Papers 0003, Department of Economics, University of Victoria.
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