Hidden Economies and the Socially Optimal Fiscal-Tax to Liquidity-Tax Ratio

Marco Ercolani

Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), 2007, vol. 1, No 2007-6, 32 pages

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.

Keywords: inflation tax; hidden/shadow/underground economy; seigniorage (search for similar items in EconPapers)
JEL-codes: E31 E52 H21 O17 (search for similar items in EconPapers)
Date: 2007
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Working Paper: Hidden Economies and the Socially Optimal Fiscal-Tax to Liquidity-Tax Ratio (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifweej:5741

DOI: 10.5018/economics-ejournal.ja.2007-6

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