Breusch (2005b) critically addresses an important and challenging question: Is it reliable to use the Multiple Indicators Multiple Causes model to estimate Shadow Economy? Breusch concludes that this approach is not suitable for the purpose. Breusch’s paper highlights the different procedures...

Breusch (2005b) critically addresses an important and challenging question: Is it reliable to use the Multiple Indicators Multiple Causes model to estimate Shadow Economy? Breusch concludes that this approach is not suitable for the purpose. Breusch’s paper highlights the different procedures...

This paper examines the role of shadow economy, tax enforcement and taxation, on economic growth. These effects are studied by simulating a modified version of an endogenous growth model proposed by Loayza (1996). Econometric results and calibration are based on the Italian economy over the...