This paper develops a structural, latent variable, model for the hidden economy in New Zealand, and a separate currency-demand model. The latent variable model is used to generate an historical time-series index of hidden economic activity, which is calibrated via the information from the currency-demand model. The hidden economy varies between 6.8% and 11.3% of measured GDP. This, in turn, implies that the tax-gap is of the order of 6.4% to 10.2% of total tax liability in that country.
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Paper provided by Department of Economics, University of Victoria in its series Econometrics Working Papers with number
9807.
Length: 40 pages Date of creation: 03 Jun 1998 Date of revision: Handle: RePEc:vic:vicewp:9807
Note: ISSN 1485-6441. This paper was also released as UVic Discussion Paper 97-08 in April 1997, and a longer preliminary version was released as N.Z. Inland Revenue Department Working Paper 5a, November/December 1996. The final version of this paper is now available as vicewp:9905. Contact details of provider: Postal: PO Box 1700, STN CSC, Victoria, BC, Canada, V8W 2Y2 Phone: (250)721-8540 Fax: (250)721-6214 Web page: http://web.uvic.ca/econ More information through EDIRC
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