Tax Policies and Interaction between Hidden and Official Economy
This paper combines a macroeconomic framework and a microeconomic analysis to estimate the effects of tax policies on the interaction between the hidden economy and the official economy in the Netherlands. Simulation results show that general tax policies of the government have little influence on the size of the hidden economy. More specific tax policies, like a differentiated reduction of value added taxes on labor-intensive goods are more effective to reduce the size of the hidden economy. The influence of the hidden economy on the official economy is small because substitution effects are partly offset by contrary income effects.
Year of publication: |
1990
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Authors: | Graafland, J J |
Published in: |
Public Finance = Finances publiques. - Vol. 45.1990, 1, p. 75-89
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Saved in:
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