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The underground economy and the fiscal stance

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Resumo:The inevitability of taxes and regulations, that cause agents to go underground, forces the authorities to tolerate some underground economic activity and grants the underground economy natural features. The natural level of the underground economy is defined as the level of underground economic activity in the decentralized equilibrium, provided that the actual structural characteristics of the economy and social preferences are accounted for by imbedding them in the Walrasian system of general equilibrium equations. Its existence is proven using two variants of neoclassical general equilibrium models. The underground economy is found to influence the successfulness of fiscal consolidation programmes, depending on the position of the economy relative to critical fiscal thresholds associated with the natural level of the underground economy. Tax increases yield higher tax proceeds up to the threshold, and lower tax proceeds, passed the threshold, due to a stronger expansion of the natural level of the underground economy. Tax proceeds reach their maximum at the threshold. Tax based programmes are found ineffective in high tax developed economies, operating passed the threshold. In contrast, its successfulness in the developing world, where most economies operate below the threshold with low taxes, is not influenced by the underground economy.
Autores principais:Jardim, José Manuel Norberto
Assunto:Underground economy Tax evasion Fiscal policy Stabilization Deficit Debt Applied general equilibrium models Two sector growth models Simulation modelling Economia subterrânea Evasão de impostos Politica orçamental Consolidação orçamental Défice Dívida Modelos de crescimento económico de dois sectores Simulação
Ano:2012
País:Portugal
Tipo de documento:tese de doutoramento
Tipo de acesso:acesso aberto
Instituição associada:Universidade de Lisboa
Idioma:inglês
Origem:Repositório da Universidade de Lisboa

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