Hidden Economies and the Socially Optimal Fiscal-Tax to Liquidity-Tax Ratio

Differential tax analysis is used to show how the socially optimal fiscal-tax to liquidity-tax ratio changes with the relative size of the tax-evading hidden economy. The smaller the relative size of the hidden economy, the larger the optimal fiscal-tax to liquidity-tax ratio. The empirical cross-section and panel evidence supports this theoretical result.

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Year of publication:	2007
Authors:	Ercolani, Marco G.
Institutions:	Institut für Weltwirtschaft (IfW)
Subject:	inflation tax \| hidden/shadow/underground economy \| seigniorage

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Extent:	application/pdf
Series:	Economics Discussion Papers. - ISSN 1867-8009.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Number 2007-10
Classification:	H21 - Efficiency; Optimal Taxation ; E52 - Monetary Policy (Targets, Instruments, and Effects) ; O17 - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements ; E31 - Price Level; Inflation; Deflation
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005083413