Inflation Tax and the Hidden Economy

Marco Ercolani

Economics Discussion Papers from University of Essex, Department of Economics

Abstract: Differential tax analysis is used to show how the optimal mix of inflation tax and direct taxation changes with the relative size of the hidden economy. The larger the relative size of the hidden economy, the smaller the optimal ratio of direct tax to inflation tax. Anecdotal empirical evidence supports this result.

Keywords: Hidden/Shadow economy; Optimal inflation tax; Seignorage. (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (1)

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