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Journal Article

Nr. 2007-6 | June 28, 2007
Marco G Ercolani
Hidden Economies and the Socially Optimal Fiscal-Tax to Liquidity-Tax Ratio PDF Icon

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

Citation

Marco G Ercolani (2007). Hidden Economies and the Socially Optimal Fiscal-Tax to Liquidity-Tax Ratio. Economics: The Open-Access, Open-Assessment E-Journal, Vol. 1, 2007-6. http://www.economics-ejournal.org/economics/journalarticles/2007-6

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