: 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 …

Italian economy that, among European countries, is the second for high public debt and has one of the highest size of tax … evasion. Results show that it is possible to both reduce public debt and tax evasion through a temporary cut in public … spending associated with a permanent drop in tax rates. In this context a reallocation of resources from the underground to …

This paper contributes to the GDP-consumption comovement puzzle literature investigating the role of tax evasion in … Keynesian DSGE model combining tax evasion with financial frictions à la Bernanke, Gertler, Gilchrist (1999). The main result of … our paper shows that tax evasion can considerably shrink the GDP-consumption comovement puzzle area. …