Abstract: Hiding operations from tax collectors increases information asymmetries between borrowers and lenders and ultimately reduces firms' access to finance. However, credit-constrained entrepreneurs can still fund investment by paying it out of their own savings. This paper studies these...

Abstract: Hiding operations from tax collectors increases information asymmetries between borrowers and lenders and ultimately reduces firms' access to finance. However, credit-constrained entrepreneurs can still fund investment by paying it out of their own savings. This paper studies these...

Using Bayesian estimation techniques, we estimatea small open economy dynamic stochastic generalequilibrium model with credit-market imperfectionsfor the Colombian economy. We show thatthe combination of balance sheet effects and thechoice of monetary policy regime are likely to playan important...

The austerity plans implemented in Greece in 2010 have yielded lower than expected increases in tax receipts. We argue that this has been the result of the arbitrage that firms face when choosing to declare their activity. A tax hike has a direct effect on the degree of tax evasion, and an...

We study the underground economy within a dynamic and stochastic general equilibrium framework. Our model combines limited tax enforcement with an otherwise standard two-sector neoclassical stochastic growth model. The Bayesian estimation of the model based on Italian data provides evidence in...

In a dynamic stochastic general equilibrium model with heterogeneous agents, this note shows that beyond a certain low level, financial development is associated with higher relative consumption–income volatility in the presence of a working capital constraint. Informality on the other hand...

The cyclical behaviour of prices in the U.K. is investigated using a sample of annual observations covering the period 1886-1993. A structural time series model relating consumer prices to output is estimated over four sub-periods. The results indicate that prices were procyclical in the...

This paper studies the role of credit market development in an economy with credit frictions. I examine how the provision of credit in connection with collateral assets affects both economic performance and business cycle volatility. First, I analyse the macroeconomic implications of an...