The impact of shadow economy and/or corruption on private consumption: further evidence from selected Eurozone economies

Ioannis Kostakis

Eurasian Economic Review, 2017, vol. 7, issue 3, No 6, 434 pages

Abstract: Abstract According to neoclassical perception the growth of private consumption appears to be higher during (or after) fiscal consolidation periods via the fiscal multiplier effect. Therefore, private consumption booms are more likely to be associated with large cuts in deficits by either increasing taxes or by reducing public spending. Simultaneously, only recently shadow economy and corruption have gained scientific attention, and in the studies appear to have mainly negative effects on real economy. This research uses an alternative growth of private consumption approach using dynamic panel data regression analysis of seventeen Eurozone countries over the period 1995–2015. Empirical findings display that corruption and/or shadow economy might be substitutes regarding its effect on individuals’ real consumption growth. Furthermore, consolidation periods experience a marginal lower private growth of consumption, questioning the generality of neoclassical theory implication.

Keywords: Private consumption; Shadow economy; Corruption; Fiscal consolidations; Panel data analysis (search for similar items in EconPapers)
JEL-codes: E21 E63 H30 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://link.springer.com/10.1007/s40822-017-0072-2 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:eurase:v:7:y:2017:i:3:d:10.1007_s40822-017-0072-2

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/40822

DOI: 10.1007/s40822-017-0072-2

Access Statistics for this article

Eurasian Economic Review is currently edited by Dorothea Schäfer

More articles in Eurasian Economic Review from Springer, Eurasia Business and Economics Society Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().