Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/142548
Authors: 
de Mendonça, Gui Pedro
Year of Publication: 
2009
Series/Report no.: 
EERI Research Paper Series 16/2009
Abstract: 
We discuss the implications of informality on growth and fiscal policy by considering an informal sector based on low tech firms, in an open economy model of endogenous growth, where labour supply is elastic and increasing returns arise from public spending. We allow for both labour and capital to allocate between sectors and examine the dynamic and policy issues that arise in an economy, where long run outcomes are still dominated by formal activities, but long macroeconomic transitions arise as a result of informal microeconomic activities, which take advantage of both government taxation and limited fiscalization.
Subjects: 
Endogenous Growth Theory
Optimal Fiscal Policy
Informal Sector
Public Capital
JEL: 
C61
E62
F43
O17
O41
Document Type: 
Working Paper

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