Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/252139 
Year of Publication: 
2022
Series/Report no.: 
CESifo Working Paper No. 9622
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Fiscal consolidation literature often neglects that there are economies with a sizable underground sector and that most of time it is accounted in GDP statistics. This produces non negligible effects on fiscal multipliers. This paper explores a fiscal consolidation plan calling for a downsizing of the underground sector as well. The analysis refers to the Italian economy that, among European countries, is the second for high public debt and has one of the highest size of tax evasion. Results show that it is possible to both reduce public debt and tax evasion through a temporary cut in public spending associated with a permanent drop in tax rates. In this context a reallocation of resources from the underground to market sector operates.
Subjects: 
fiscal consolidation plans
underground economy
DSGE modelling
JEL: 
E26
E32
E62
E63
H26
Document Type: 
Working Paper
Appears in Collections:

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.