Discussion Paper

No. 2007-10 | March 12, 2007
Hidden Economies and the Socially Optimal Fiscal-Tax to Liquidity-Tax Ratio

Abstract

Differential tax analysis is used to show how the socially optimal fiscal-tax to liquidity-tax ratio changes with the relative size of the tax-evading hidden economy. The smaller the relative size of the hidden economy, the larger the optimal fiscal-tax to liquidity-tax ratio. The empirical cross-section and panel evidence supports this theoretical result.

JEL Classification

E31 E52 H21 O17

Cite As

Marco G Ercolani (2007). Hidden Economies and the Socially Optimal Fiscal-Tax to Liquidity-Tax Ratio. Economics Discussion Papers, No 2007-10, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2007-10

Assessment



Comments and Questions


Marco Ercolani - Title change?
March 20, 2007 - 15:41

A minor point really... In view of the previous discussion papers, should the title be changed to:
"Shadow Economies and the Socially Optimal Fiscal-Tax to Seigniorage-Tax Ratio"?


anonymous - Referee Report
April 02, 2007 - 11:11

see attached file


anonymous - Referee Report
April 24, 2007 - 12:14

see attached file


Marco Ercolani - Response to Referee Reports
May 01, 2007 - 15:26

This document cointains responses to both referees' comments and suggestions.