The government influences the equilibrium size of hidden activity. Higher taxes give an incentive to evade. The provision of public services, social transfers and public employment may have offsetting effects on the underground economy. The budget constraint makes the relation between the shadow...

The cash economy and associated tax evasion is an on-going issue for most tax administrators. Tax evasion reduces national tax revenue, shifts the tax burden on to other taxpayers such as salary/wage earners and undermines confidence in the tax system affecting voluntary compliance as well as...

This paper analyzes the effects of fiscal policy in Italy by employing a database containing two statistical novelties: quarterly fiscal variables on accrual basis and a time series estimate of tax evasion for the period 1981:1-2006:4. Following Revenue Agency suggestions, we use in a VECM the...

This paper establishes a basic definitional framework that can be used to assess long-running fiscal practices in the states against a standard of fiscal prudence. The aim is to further refine this framework to capture the drivers of the states' long-running fiscal problems and to offer...