Journal Article
No. 2007-6 | June 28, 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

Assessment

Links

Cite As

Marco G Ercolani (2007). Hidden Economies and the Socially Optimal Fiscal-Tax to Liquidity-Tax Ratio. Economics: The Open-Access, Open-Assessment E-Journal, 1 (2007-6): 1—32. http://dx.doi.org/10.5018/economics-ejournal.ja.2007-6


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