Growth, Fiscal Policy and the Informal Sector in a Small Open Economy

Arbeitspapier

We discuss the implications of informality on growth and fiscal policy by considering an informal sector based on low tech firms, in an open economy model of endogenous growth, where labour supply is elastic and increasing returns arise from public spending. We allow for both labour and capital to allocate between sectors and examine the dynamic and policy issues that arise in an economy, where long run outcomes are still dominated by formal activities, but long macroeconomic transitions arise as a result of informal microeconomic activities, which take advantage of both government taxation and limited fiscalization.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: EERI Research Paper Series ; No. 16/2009

Classification and Topics

• Classification: Wirtschaft ; Optimization Techniques; Programming Models; Dynamic Analysis ; Fiscal Policy ; Economic Growth of Open Economies ; Formal and Informal Sectors; Shadow Economy; Institutional Arrangements ; One, Two, and Multisector Growth Models
• Subject: Endogenous Growth Theory ; Optimal Fiscal Policy ; Informal Sector ; Public Capital

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): de Mendonça, Gui Pedro
• Event: Veröffentlichung
• (who): Economics and Econometrics Research Institute (EERI)
• (where): Brussels
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/142548
• Last update: 10.03.2025, 11:43 AM CET