In the Shadow of Public Debt: Are there Relations between Public Debt and the Shadow Economy?

Aloys Prinz () and Hanno Beck ()
Additional contact information
Aloys Prinz: Institute of Public Economics II, University of Münster, 48143 Münster, Germany
Hanno Beck: Hochschule Pforzheim University, 75175 Pforzheim, Germany

Economic Analysis and Policy, 2012, vol. 42, issue 2, 221-236

Abstract: The question of this paper is whether there is a relation between the size of the shadow economy, the inflation tax and the debt-to-GDP ratio. This relationship is relevant for an understanding of sovereign debt crisis in a currency union due to the loss of a national inflation tax and due to tax evasion as a consequence of sizeable shadow economies. In this paper, empirical evidence is presented for the effect of the size of the shadow economy on the debt-to-GDP ratio as well as for the debt-increasing effect of the start of the European Monetary Union in 1999.

Keywords: public debt; shadow economy; inflation tax; EMU (search for similar items in EconPapers)
JEL-codes: H26 H63 O17 (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0313592612500226
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:42:y:2012:i:2:p:221-236

Access Statistics for this article

Economic Analysis and Policy is currently edited by Clevo Wilson

More articles in Economic Analysis and Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().