Public financing with financial frictions and underground economy

• 成果类型: Article
• 署名作者: Erosa, Andres; Fuster, Luisa; Martinez, Tomas R.
• 署名单位: Universidad Carlos III de Madrid; Universidade de Brasilia
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2022.12.004
• 发表日期: 2023
• 页码: 20-36
• 关键词: Occupational choice; informality; financial frictions; public finance

摘要

What are the aggregate effects of informality in a financially constrained economy? We develop and calibrate an entrepreneurship model to data on matched employer-employee from both formal and informal sectors in Brazil. The model distinguishes between infor-mality on the business side and the hiring of informal workers by formal businesses. Poli-cies that reduce business informality increase aggregate output by 10.8%, TFP by 6.6%, and tax revenue by 33.2%. On the contrary, output and TFP decrease when policies reduce the intensive margin of informality, underscoring that the informal economy can play a posi-tive role in an economy with financial frictions. (c) 2023 The Authors. Published by Elsevier B.V.