Settore sommerso e politiche di emersione: un approccio stocastico

Marisa Cenci and Margherita Scarlato

STUDI ECONOMICI, 2002, vol. 2002/76, issue 76

Abstract: Settore sommerso e politiche di emersione: un approccio stocastico (di Marisa Cenci e Margherita Scarlato) - ABSTARCT: The aim of this paper is to analyse the role of uncertainty in shaping the behavior of firms in the underground economy. Following the "option value" approach, we present a dynamic model which captures (1) the irreversibility of reallocation decisions from the underground sector to the legal sector and (2) the option value of delaying the reallocation decisions when stochastic shocks can change substantially the net present returns in both the legal and the underground sectors. This model allows us to draw a number of interesting policy implications. Last we use our theoretical results to address a number of specific issues that arise in the case of the Mezzogiorno of Italy. We show that our framework provides some insights that could be fruitfully considered in the current discussion on the appropriate interventions to reduce the size of the underground economy in the Italian Southern regions.

Date: 2002
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Related works:
Working Paper: Settore sommerso e politiche di emersione: un approccio stocastico (2004)
Working Paper: Settore sommerso e politiche di emersione: un approccio stocastico (2001)
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