AN ANTI-AUSTERITY POLICY RECIPE AGAINST DEBT ACCUMULATION IN THE PRESENCE OF HIDDEN ECONOMY
Journal Title: Asian Economic and Financial Review - Year 2016, Vol 6, Issue 2
Abstract
Contrary to what the literature on the linkage between debt accumulation and hidden economy suggests, this paper advocates that the two relationships, tax-hidden economy size and inflation-hidden economy size, have to be inverse because it is the relative, not the absolute hidden economy size that matters, and it is this that should be the yardstick for empirical work on the subject. It is also this that should be the yardstick for policymaking against debt accumulation by following the anti-austerity policy recipe that debt manipulation should be relying more on money than on taxation, that as soon as more money facilitates hidden activities, tax design should be counteracting this trend too, and that the Laffer curve should be peaking at an average tax rate which is less than one. This rule derives as a matter of preserving such official-cum-hidden economy technical-cum-allocative efficiency over the course of the business cycle that keeps the overall economy always in general equilibrium.
Authors and Affiliations
Gerasimos T. Soldatos| American University of Athens, Athens, Greece
Keywords
Related Articles
- EP ID EP2250
- DOI -
- Views 554
- Downloads 42
EXPORT LED GROWTH OR GROWTH LED EXPORT HYPOTHESIS IN INDIA: EVIDENCE BASED ON TIME-FREQUENCY APPROACH
A plethora of research activity on the relationship between a country’s export and economic growth has produced ambiguous and mixed results. We reinvestigate this relationship using the methodology of wavelets based corr...
Retracted: The Effect of Global Liquidity on Macroeconomic Parameters
Depending on the international economic integration as a result of the increasingglobalization, national economies have become more sensitive to the externaleconomic developments. In such an environment, it is important...
MONETARY POLICY SHOCKS AND EXCHANGE RATE VOLATILITY IN NIGERIA
This paper analysed the effects of monetary policy shocks using changes in various monetary policy instruments on exchange rate volatility in Nigeria. This paper investigates the relationship between exchange rate volati...
CORPORATE FAILURE PREDICTION MODELS FOR ADVANCED RESEARCH IN CHINA: IDENTIFYING THE OPTIMAL CUT OFF POINT
The rapid growth of the Chinese economy has resulted in Chinese listed companies entering numerous global supply chains, and thereby contributing to the globalization of economies. Accurately predicting corporate distres...
INTEGRATION AND DYNAMIC LINKAGES OF THE INDIAN STOCK MARKET WITH BRIC – AN EMPIRICAL STUDY
The interrelationships, interdependencies, integration, and dynamic linkages in between countries, regions including BRIC, country-region, and developing-developed stock markets had been thoroughly researched in the lite...