Rethinking the Informal Economy and the Hugo Effect / Francesco Pappadà, Kenneth S. Rogoff.

Format:

Book

Author/Creator:

Pappadà, Francesco.

Contributor:

National Bureau of Economic Research.

Rogoff, Kenneth S.

Series:

Working Paper Series (National Bureau of Economic Research) no. w31963.

NBER working paper series no. w31963

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2023.

Summary:

This paper offers a new approach to measuring the size of the informal economy based on VAT data for the European Union. Although data intensive, our EVADE measure is simpler and more transparent than existing measures. EVADE also shows more variation across countries of Europe than earlier measures, including higher informality in Greece, Italy and Spain, for example. Moreover, we find considerably higher variation within countries across time; in a cross-country time series regression, controlling for tax rates, we confirm that the informal economy grows significantly in recessions and decreases in booms, which we term the "Hugo effect".

Notes:

Print version record

December 2023.