This paper contributes to the GDP-consumption comovement puzzle literature investigating the role of tax evasion in explaining the consumption path after a Marginal Efficiency of Investment shock. We use an otherwise standard medium-scale New Keynesian DSGE model combining tax evasion with financial frictions à la Bernanke, Gertler, Gilchrist (1999). The main result of our paper shows that tax evasion can considerably shrink the GDP-consumption comovement puzzle area.

Investment Shocks, Tax Evasion and the Consumption Puzzle: A DSGE Analysis with Financial Frictions

Marzano, Elisabetta;Chiarini, Bruno;Ferrara, Maria
2016-01-01

Abstract

This paper contributes to the GDP-consumption comovement puzzle literature investigating the role of tax evasion in explaining the consumption path after a Marginal Efficiency of Investment shock. We use an otherwise standard medium-scale New Keynesian DSGE model combining tax evasion with financial frictions à la Bernanke, Gertler, Gilchrist (1999). The main result of our paper shows that tax evasion can considerably shrink the GDP-consumption comovement puzzle area.
2016
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11367/56999
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