National accounts, fiscal rules and fiscal policy. Mind the hidden gaps

Maurizio Bovi ()

No 76, ISAE Working Papers from ISTAT - Italian National Institute of Statistics - (Rome, ITALY)

Abstract: Underground activities affect crucial fiscal ratios generating “gaps” both in government revenues and in national accounts. I address this topic exploiting the peculiarities of the Italian situation. First, I describe the pros and cons of the Italian method to estimate the (non trivial share of) shadow economy. This sheds some light on the reliability of GDP estimates and allows unraveling some policy-relevant national accounts gaps. Second, I examine the links between undeclared incomes, tax burden and fiscal policy in a system possibly suffering from unpleasant arithmetic. Data suggest that government revenues and tax evasion go hand-in-hand and highlight the difficulties of policymaking.

Keywords: Fiscal Rules; National Accounts; Shadow Economy; Taxation. (search for similar items in EconPapers)
JEL-codes: C32 C53 E26 H26 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2007-01
New Economics Papers: this item is included in nep-eec, nep-mac and nep-pbe
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