Market consumpition and hidden consumption. A test for substitutability

Bruno Chiarini and Elisabetta Marzano

No 79, Working Papers in Public Economics from Department of Economics and Law, Sapienza University of Roma

Abstract: In this paper we perform an empirical analysis on the relationship between private consumption and underground economy for the Italian case. We find that private market consumption and underground (or hidden) consumption may be defined as ''complementary goods'': an increase in underground consumption tends to rise family market consumption and increase its marginal utility. An implication of this result is that the nonmarket sector does not offer hedging opportunities to the consumer-worker as stressed in Busato and Chiarini (2004) artificial economy. Moreover, wealth effects associated with a change in underground consumption are negative. A statistical model confirms this structural interpretation.

Keywords: underground economy; underground consumption. (search for similar items in EconPapers)
JEL-codes: C52 D11 D12 D18 E21 (search for similar items in EconPapers)
Pages: 30
Date: 2005-06
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Related works:
Journal Article: Market consumption and hidden consumption. A test for substitutability (2006)
Working Paper: Market Consumption and Hidden Consumption: A Test for Substitutability (2006)
Working Paper: MARKET COMSUMPTION AND HIDDEN CONSUMPTION. A TEST FOR SUBSTITUTABILITY (2004)
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