info:eu-repo/semantics/workingPaper
Macroeconomic implications of the underground sector : challenging the double business cycle approach
Registro en:
Granda Caravajal, C. (2011). Macroeconomic implications of the underground sector : challenging the double business cycle approach. Working Paper Series, (14), 1-57.
1518-3548
Autor
Granda Carvajal, Catalina
Institución
Resumen
ABSTRACT: Within the literature on business cycles featuring shadow economic activities,
there is an approach based on the arguable premise that fluctuations in the official
and unofficial sectors are negatively correlated. The present paper develops a
real business cycle model that does not impose such an assumption. To do so,
preferences are characterized so that regular and irregular labor are additively
separable. Furthermore, leisure time is spent on both irregular work effort and
non-market activities. Simulations are conducted to examine the performance of
the model economy and to compare the resulting cyclical features with related
empirical findings. In addition, computational experiments allow to analyze the
effects of different tax structures, enforcement rates and tastes for irregular labor
on the volatility and comovements of aggregate variables. These simulations and
experiments overall offer a more comprehensive view of the cyclical implications
of the shadow economy.