This paper presents an empirical analysis of the relationship between fiscal illusion and the shadow economy for 104 countries over the period 1989-2009. We argue that both unobservable phenomena are closely linked to each other, as the creation of a fiscal illusion may be helpful if governments...

The aims of this paper are, firstly, to estimate the Italian shadow economy by means of a structural equation approach and, secondly, to verify the generality of the main criticisms about the reliability of the "MIMIC method" (or model approach) for this kind of analysis. Using the Italian...