Modelling the Hidden Economy and the Tax-Gap in New Zealand
AbstractThis paper develops and estimates a structural, latent variable, model for the hidden economy in New Zealand, and a separate currency-demand model. The estimated 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. Special attention is paid to data non-stationarity, and diagnostic testing. The size of the hidden economy is found to vary between 6.8% and 11.3% of measured GDP. This, in turn, implies that the total tax-gap is of the order of 6.4% to 10.2% of total tax liability in that country, though of course not all of this foregone revenue would be recoverable.
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Bibliographic InfoPaper provided by Department of Economics, University of Victoria in its series Econometrics Working Papers with number 9905.
Length: 26 pages
Date of creation: 20 Feb 1999
Date of revision:
Publication status: Forthcoming in "Empirical Economics", 1999.
Note: ISSN 1485-6441. Earlier versions of this paper was released as University of Victoria Department of Economics Discussion Paper 97-8, April 1997, and UVic EWP9807, EWP9810.
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 Avoidance; Tax Evasion; Tax-Gap;
Other versions of this item:
- David E. A. Giles, 1999. "Modelling the hidden economy and the tax-gap in New Zealand," Empirical Economics, Springer, vol. 24(4), pages 621-640.
- David E. A. Giles, 1998. "Modelling the Hidden Economy and the Tax-Gap in New Zealand," Econometrics Working Papers 9810, Department of Economics, University of Victoria.
- 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-1999-07-28 (All new papers)
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