benevolent government, which cares equally about its citizens, to tax capital heavily and to subsidise labour; (ii) a Pareto …

: quarterly fiscal variables on accrual basis and a time series estimate of tax evasion for the period 1981:1-2006:4. Following … unless the dynamics of the hidden and regular components of the GDP are disentangled. Changes in public spending and the tax … rate generate a reallocation from underground to the regular economy which contributes to obscure the spending and tax …