National accounts, fiscal rules and fiscal policy. Mind the hidden gaps
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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- repec:dau:papers:123456789/1888 is not listed on IDEAS
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"The Dark, and Independent, Side of the Italian Labour Market,"
CEIS, vol. 19(4), pages 721-748, December.
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3433, C.E.P.R. Discussion Papers.
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- Patrick J. Caragata, & David E. A. Giles, 1998. "Simulating the Relationship Between the Hidden Economy and the Tax Level and Tax Mix in New Zealand," Econometrics Working Papers 9804, Department of Economics, University of Victoria.
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- Bovi Maurizio, 2004. "The (Underground) Wealth of Nations," Politica economica, Società editrice il Mulino, issue 1, pages 117-139.
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