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An Improvement Of The Tanzi Method For The Estimation Of Italian Ungerground Economy

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  • Maurizio Bovi

    (ISAE - Institute for Studies & Economic Analyses)

Abstract

This paper deals with the Tanzi method for the estimation of underground economy. The approach is discussed and modified. Refinements on the variables and on the econometric technique are proposed. The “adjusted” Tanzi method is then used to estimate the shadow economy in Italy along twenty-eight years. Despite the difficulty to obtain point estimates, interpretations of the results are nevertheless possible, trustworthy and interesting. For instance, the model detects the presence of underground economy, an expected finding. On the other hand the model shows no positive trend in the recent period. A very puzzling result, given the mainstream literature and the policymakers claims.

Suggested Citation

  • Maurizio Bovi, 2004. "An Improvement Of The Tanzi Method For The Estimation Of Italian Ungerground Economy," Public Economics 0404009, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwppe:0404009
    Note: Type of Document - pdf; pages: 14
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    References listed on IDEAS

    as
    1. Pesaran, M Hashem, 1997. "The Role of Economic Theory in Modelling the Long Run," Economic Journal, Royal Economic Society, vol. 107(440), pages 178-191, January.
    2. Breusch, Trevor S & Wickens, Michael R., 1987. "Dynamic Specification, the Long Run and the Estimation of Transformed Regression Models," CEPR Discussion Papers 154, C.E.P.R. Discussion Papers.
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    Cited by:

    1. Solis-Garcia, Mario & Xie, Yingtong, 2017. "Is GDP more volatile in developing countries after taking the shadow economy into account? Evidence from Latin America," MPRA Paper 78965, University Library of Munich, Germany.
    2. Chiumya, Chiza, 2007. "The Parallel Economy in Malawi: Size, Effect on Tax Revenue and Policy Options," MPRA Paper 9860, University Library of Munich, Germany.

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    Keywords

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    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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