On the Estimation and the Updating of the Hidden Economy Estimates and Their Implications for Government Expenditure: UK (1960-1990)
D K Bhattacharyya
Public Finance = Finances publiques, 1999, vol. 54, issue 1-2, 37-56
This paper examines the problem of updating existing estimated hidden economy series. For 2-3 years, the existing generating process provides reasonably accurate estimates. However, updating for a longer period requires re-estimating the hidden economy. The problem is very similar to the problem encountered in updating national income statistics. The government expenditure function is used to discriminate between two plausible hidden economy series. This experiment produced a number of interesting results in relation to Wagner's Law and the implicit tax rate for the hidden economy. Also a possible explanation for observing smooth recorded economic series after the 1987 UK crash is provided.
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Persistent link: https://EconPapers.repec.org/RePEc:pfi:pubfin:v:54:y:1999:i:1-2:p:37-56
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