- Rome, Lazio, Italy
Maurizio Bovi
Istat, Econometric analyses and Forecasts, Department Member
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As recently suggested, the shadow economy and its determinants (taxation, regulations, corruption, etc.) are linked such that just two stable equilibria are possible. In the good one there is a small hidden sector, large fiscal revenues... more
As recently suggested, the shadow economy and its determinants (taxation, regulations, corruption, etc.) are linked such that just two stable equilibria are possible. In the good one there is a small hidden sector, large fiscal revenues and honest/appreciated institutions. The other (bad) equilibrium is quite the opposite. Our paper examines the links between these variables in relatively uncorrupt systems. Unlike
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Using the Hodrick-Prescott filter, this paper examines the cyclical properties of the Italian labour market. Its main contribution is the empirical analysis of three different labour inputs - regular employees, regular self-employed and... more
Using the Hodrick-Prescott filter, this paper examines the cyclical properties of the Italian labour market. Its main contribution is the empirical analysis of three different labour inputs - regular employees, regular self-employed and underground workers. Results from VAR models support the widespread view that the shadow employment functions as an improper tool for increasing the flexibility of the labour market.
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$EVWUDFW This paper investigates the usefulness of Italian consumer surveys as estimation and forecasting tool over the period 1982-2003. To this end, standard consumption equations are estimated and then compared, in terms of in-sample... more
$EVWUDFW This paper investigates the usefulness of Italian consumer surveys as estimation and forecasting tool over the period 1982-2003. To this end, standard consumption equations are estimated and then compared, in terms of in-sample and out-of-sample predictive ability, with corresponding models which differ from them only because of the presence of the confidence indicator. Unlike mainstream literature, the present work focuses on the relationships between subjective and objective information at a less aggregate level. In particular, the overall sentiment index is divided into four sub-indices related to the opinion about the i) current, ii) future, iii) general, and iv) personal situation. In turn, the total private consumption is divided in five items. The idea behind is to check if one attitudinal measure is more or less informative than another, and if some outlay is more or less “sentiment sensitive” than another. It is shown that the qualitative information obtained from household surveys improves both the goodness-of-fit of consumption equations and their forecasting performances. It is noteworthy that these improvements are all the more evident when working on disaggregated data, L H., linking a particular kind of consumption to a particular sub index. For instance, perceptions about the future help to explain consumption for services more than disbursement for non durable goods.
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The government influences the equilibrium size of hidden activity. Higher taxes give an incentive to evade. The provision of public services, social transfers and public employment may have offsetting effects on the underground economy.... more
The government influences the equilibrium size of hidden activity. Higher taxes give an incentive to evade. The provision of public services, social transfers and public employment may have offsetting effects on the underground economy. The budget constraint makes the relation between the shadow economy, taxes and spending inherently dynamic. A lack of time series data has prohibited the analyisis of these feedback effects. We take advantage of a unique dataset on the Italian underground economy. We find that over the period 1980-2004 the underground economy reacts to changes in government spending as well as to variations in the tax burden.
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preliminary results of the research projects carried out within ISAE. The diffusion of the papers is subject to the favourable opinion of an anonymous referee, whom we would like to thank. The opinions expressed are merely the Authors ’... more
preliminary results of the research projects carried out within ISAE. The diffusion of the papers is subject to the favourable opinion of an anonymous referee, whom we would like to thank. The opinions expressed are merely the Authors ’ own and in no way involve the ISAE responsability. The series is meant for experts and policy-makers with the aim of submitting proposals and raising suggestions and criticism. La serie “Documenti di Lavoro ” dell’Istituto di Studi e Analisi Economica ospita i risultati preliminari di ricerche predisposte all’interno dell’ISAE: La diffusione delle ricerche è autorizzata previo il parere favorevole di un anonimo esperto della materia che qui si ringrazia. Le opinioni espresse nei “Documenti di Lavoro ” riflettono esclusivamente il pensiero degli autori e non impegnano la responsabilità dell’Ente. La serie è destinata agli esperti e agli operatori di politica economica, al fine di formulare proposte e suscitare suggerimenti o critiche. Stampato presso ...
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This paper examines the emergence of economic clubs and its coherence with the european commitments. to this end, it analyses business cycle comovements in six industrialised economies, which are pooled into several clusters. results lead... more
This paper examines the emergence of economic clubs and its coherence with the european commitments. to this end, it analyses business cycle comovements in six industrialised economies, which are pooled into several clusters. results lead to conclude that an english-speaking club (canada, uk, us) is emerging in the last decades, whereas explicit and formal commitments seem to have had a relatively weaker power in determining euro-zone business cycles comovements. while the broad conclusions are consistent with the existing literature the proposed empirical framework is not based on correlations testing, under very few assumptions, the relative cyclical association via the marginal homogeneity in 2x2 contingency tables.
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A recent literature questions the mainstream omniscient rational agent, suggesting that agents act as, and have the same bounded rationality of, econometricians. Heterogeneous expectations may then arise because of the different... more
A recent literature questions the mainstream omniscient rational agent, suggesting that agents act as, and have the same bounded rationality of, econometricians. Heterogeneous expectations may then arise because of the different forecasting models used by individuals, who select disparate predictors according to the peculiar net benefits of each model. Net benefits are assumed to be a function of mean square forecasting errors (MSE). Consequently, as in Carroll’s epidemiological approach, an implicit assumption is that the level of disagreement across agents cannot Granger cause model-based MSE. Instead, survey expectations on GDP growth show that the information flow runs exclusively from heterogeneity to MSE. Moreover, variance decompositions point out that survey expectations entropy and MSE are not contemporaneously correlated, enforcing the detected causal chain. Results are robust to several predictors, nonlinearities, and suggest looking also at other possible causes of disag...
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Standard dynamic stochastic general equilibrium (DSGE) models are populated by fully-informed-optimising Muth-rational agents. This kind of agent is at odds with well-known psychological biases, not to mention real life people. In... more
Standard dynamic stochastic general equilibrium (DSGE) models are populated by fully-informed-optimising Muth-rational agents. This kind of agent is at odds with well-known psychological biases, not to mention real life people. In particular, there are strong theoretical and empirical reasons to believe that consumers are overly optimistic. Also, the size of over optimism is likely to show cyclical features. In this paper we simulate two DSGE models, one standard with Muth-rational consumers, the other different just because agents are allowed to over consume. We then compare them throughout different cyclical phases. Results show that taking into account psychological biases allows the DSGE to fit better actual data in the long-run and in an economic boom scenario. Recessions are instead characterized by pessimism. We also find that over consumption is a structural trait. Moreover, booms enlarge significantly the magnitude of the bias. These findings are in line with - and enrich -...
It is commonly thought that the underground economy is larger in Italy than in most other developed countries and that it is growing. Using several methods of measuring it we found no sound support for such view but rather that it... more
It is commonly thought that the underground economy is larger in Italy than in most other developed countries and that it is growing. Using several methods of measuring it we found no sound support for such view but rather that it fluctuates around a stable mean. We found confirmation of the widespread view of a larger underground economy in the southern regions of the country than in the center-north. We moreover found that the differences between the south and the center-north are not limited to its size but extend to its nature and motivations, thus reaffirming the dualism of the country
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Virtually all governments seek to fight tax evasion exploiting better and better technological devices. Despite of that the phenomenon still remains alive and kicking all around the world. The foregoing naturally arises the question in... more
Virtually all governments seek to fight tax evasion exploiting better and better technological devices. Despite of that the phenomenon still remains alive and kicking all around the world. The foregoing naturally arises the question in the title. This paper develops a simple model to provide some answers to this puzzling issue. Tax evasion is persistent because of the taxpayer's opportunistic behavior and the complex relationships linking it to the cost/quality of the institutional setting. More fundamentally, our model highlights that conditions required for steady state zero-tax evasion (no taxation and/or 100$\%$ probability to be caught) are outside the strategies available for governments.
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The Tax-to-GDP ratio is an important tool for both economists and policymakers. Despite its pivotal role, this indicator is measured and analyzed without due attention to the potential biases stemming from the so called non-observed... more
The Tax-to-GDP ratio is an important tool for both economists and policymakers. Despite its pivotal role, this indicator is measured and analyzed without due attention to the potential biases stemming from the so called non-observed economy. This note aims at filling this gap, pointing out the effects of untaxed and undeclared incomes on both sides of the Tax-to-GDP ratio.
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Economic theory suggests that taxation, regulations, efficiency of the bureaucracy and corruption are among the causes of the underground economy. The association between these variables is investigated by using panel regression... more
Economic theory suggests that taxation, regulations, efficiency of the bureaucracy and corruption are among the causes of the underground economy. The association between these variables is investigated by using panel regression techniques. The results show that, for OECD countries in the 1990s, the underground economy was positively correlated mainly with institutional failures and, to a lesser extent, with taxation and market regulations. Reflecting a sustained expansion of their public sectors, many OECD countries have raised the tax burden up to late 1990s and improved their institutions. This has led regulations and taxation, excluding social contributions, to increase their association with the shadow economy in the area.
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The exact linear dependency among age, period and birth cohort makes it impossible to recover the true parameters of Age-Period-Cohort (APC) models. We then propose to extract reliable information ...
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The Series Documenti di Lavoro of the Istituto di Studi e Analisi Economica Institute for Studies and Economic Analyses (ISAE) hosts the preliminary results of the research projects carried out within ISAE. The diffusion of the papers... more
The Series Documenti di Lavoro of the Istituto di Studi e Analisi Economica Institute for Studies and Economic Analyses (ISAE) hosts the preliminary results of the research projects carried out within ISAE. The diffusion of the papers is subject to the favourable opinion of an ...
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The aim of this paper is twofold. First, new annual data on Italian irregular sector for the period 1980-1991 are reconstructed. These data are compatible with the available 1992-2001 official data. Second, based on this self-consistent... more
The aim of this paper is twofold. First, new annual data on Italian irregular sector for the period 1980-1991 are reconstructed. These data are compatible with the available 1992-2001 official data. Second, based on this self-consistent “long” sample a time series analysis of the two sides – the dark and the regular - of the Italian GDP is performed. Results
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... The (Underground) Wealth of Nations. Autores: Maurizio Bovi; Localización: Politica economica, ISSN 1120-9496, Nº 1, 2004 , págs. 117-139. Fundación Dialnet. Acceso de usuarios registrados. Acceso de usuarios registrados Usuario.... more
... The (Underground) Wealth of Nations. Autores: Maurizio Bovi; Localización: Politica economica, ISSN 1120-9496, Nº 1, 2004 , págs. 117-139. Fundación Dialnet. Acceso de usuarios registrados. Acceso de usuarios registrados Usuario. Contraseña. Entrar. Mi Dialnet. ...
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The Tax-to-GDP ratio is an important tool for both economists and policymakers. Despite its pivotal role, this indicator is measured and analyzed without due attention to the potential biases stemming from the so called non-observed... more
The Tax-to-GDP ratio is an important tool for both economists and policymakers. Despite its pivotal role, this indicator is measured and analyzed without due attention to the potential biases stemming from the so called non-observed economy. This note aims at filling this gap, pointing out the effects of untaxed and undeclared incomes on both sides of the Tax-to-GDP ratio.
Research Interests:
Virtually all governments seek to fight tax evasion exploiting better and better technological devices. Despite of that the phenomenon still remains alive and kicking all around the world. The foregoing naturally arises the question in... more
Virtually all governments seek to fight tax evasion exploiting better and better technological devices. Despite of that the phenomenon still remains alive and kicking all around the world. The foregoing naturally arises the question in the title. This paper develops a simple model to provide some answers to this puzzling issue. Tax evasion is persistent because of the taxpayer's opportunistic behavior and the complex relationships linking it to the cost/quality of the institutional setting. More fundamentally, our model highlights that conditions required for steady state zero-tax evasion (no taxation and/or 100$\%$ probability to be caught) are outside the strategies available for governments.
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The aim of this paper is twofold. First, new annual data on Italian irregular sector for the period 1980-1991 are reconstructed. These data are compatible with the available 1992-2001 official data. Second, based on this self-consistent... more
The aim of this paper is twofold. First, new annual data on Italian irregular sector for the period 1980-1991 are reconstructed. These data are compatible with the available 1992-2001 official data. Second, based on this self-consistent “long” sample a time series analysis of the two sides – the dark and the regular - of the Italian GDP is performed. Results from univariate and VAR models seem to suggest that there are no connections (causal relationships, feedbacks, contemporaneous cyclical movements, common stochastic trends) between these two time series. In this sense, we could correctly refer to the Italian black sector as an “independent economy”.
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Cosa sappiamo dell’economia sommersa in Italia al di là dei luoghi comuni? Alcune proposizioni empiricamente fondate (di Maurizio Bovi e Laura Castellucci) - ABSTRACT: It is commonly thought that the underground economy is larger in Italy... more
Cosa sappiamo dell’economia sommersa in Italia al di là dei luoghi comuni? Alcune proposizioni empiricamente fondate (di Maurizio Bovi e Laura Castellucci) - ABSTRACT: It is commonly thought that the underground economy is larger in Italy than in most other developed countries and that it is growing. Using several methods of measuring it we find no sound empirical support for such view but rather that the underground economy seems to fluctuate around a stable mean. We find instead confirmation of the widespread view of a larger underground economy in the southern Regions of the country than in the center-north. We develop an appropriate methodology for arriving at size estimations by Regions. Finally we claim that the differences between the south and the center-north are not limited to the size of the underground economy but extend to its nature and motivations, thus reaffirming the dualism of the country and calling for regional, as opposed to national, policy interventions. JEL O...
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This paper deals with the Tanzi method for the estimation of underground economy. The approach is discussed and modified. Refinements on the variables and on the econometric technique are proposed. The “adjusted” Tanzi method is then used... more
This paper deals with the Tanzi method for the estimation of underground economy. The approach is discussed and modified. Refinements on the variables and on the econometric technique are proposed. The “adjusted” Tanzi method is then used to estimate the shadow economy in Italy along twenty-eight years. Despite the difficulty to obtain point estimates, interpretations of the results are nevertheless
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Using data from the Italian Institute of Statistics, I examine the cyclical properties of three labor inputs - regular employees, regular self-employed, and underground workers. Results support the widespread view that, in Italy, the... more
Using data from the Italian Institute of Statistics, I examine the cyclical properties of three labor inputs - regular employees, regular self-employed, and underground workers. Results support the widespread view that, in Italy, the shadow employment functions as an improper tool for increasing the labor market flexibility. My analysis uncovers more details. While the contemporaneous correlation between shadow labor and
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ABSTRACT We examine how expectations on macroeconomic evolutions affect as many as twelve different labor market status transitions in bad economic times. Such a refined analysis of job search frequencies highlights intriguing findings.... more
ABSTRACT We examine how expectations on macroeconomic evolutions affect as many as twelve different labor market status transitions in bad economic times. Such a refined analysis of job search frequencies highlights intriguing findings. In bad economic times, e.g. to make up for the loss in family income, not-working agents would like to work. On the other hand, individuals are somewhat discouraged by the deteriorated expectations and they exert only a limited search effort. This latter turns out to be insufficient to find work in poor labor markets. All in all, the evidence pins down the widespread presence of “timid” responses, depicting a hybrid picture that hardly can be related to one single theoretical approach. Specifically, our findings suggest refining the standard dichotomic setting behind the discouraged worker and added worker literature. Results are based on a battery of multinomial logit models and controlled for several individual-level and aggregate variables.