FISINF

FISCAL POLICY AND INFORMAL ECONOMY OVER THE BUSINESS CYCLE

Coordinatore	BOGAZICI UNIVERSITESI    more  Organization address address: BEBEK city: ISTANBUL postcode: 34342 contact info Titolo: Prof. Nome: Fikret Cognome: Adaman Email: send email Telefono: +90 212 359 7656 Fax: +90 212 287 2453
Nazionalità Coordinatore	Turkey [TR]
Totale costo	100˙000 €
EC contributo	100˙000 €
Programma	FP7-PEOPLE Specific programme "People" implementing the Seventh Framework Programme of the European Community for research, technological development and demonstration activities (2007 to 2013)
Code Call	FP7-PEOPLE-2010-RG
Funding Scheme	MC-IRG
Anno di inizio	2011
Periodo (anno-mese-giorno)	2011-03-01   -   2015-02-28

 Partecipanti

#	participant	country	role	EC contrib. [€]
1	BOGAZICI UNIVERSITESI  Organization address address: BEBEK city: ISTANBUL postcode: 34342 contact info Titolo: Prof. Nome: Fikret Cognome: Adaman Email: send email Telefono: +90 212 359 7656 Fax: +90 212 287 2453	TR (ISTANBUL)	coordinator	100˙000.00

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 Obiettivo del progetto (Objective)

'The proposed project aims to understand whether and how informal sector affects behavior of fiscal policy over the business cycle and then develop an economic model using the state of the art techniques of dynamic macroeconomics that incorporates fiscal policy and informal economy. This model will be used to analyze various effects of the presence of an informal sector in European countries, specifically how it affects the cyclicality of fiscal policy and thereby economic growth and aggregate productivity over the business cycle.The proposed project is original and innovative in two major dimensions: (1) methodologically, it will advance the literature on cyclicality of fiscal policy and informal economy (2) the developed model will be used to analyze important policy issues for Europe that are not discussed at length previously.'

Introduzione (Teaser)

Researchers are developing an economic model to analyse the effects of the informal economy in Europe. It will be used to examine how it relates to economic growth and policy.

Descrizione progetto (Article)

The informal sector or economy refers to activities and income generation that take place outside the formal economy, and upon which no tax or social contributions are paid. The size and presence of this informal (also called underground or shadow) economy is giving rise to major policy concerns among EU governments.

To help address these problems, the 'Fiscal policy and informal economy over the business cycle' (FISINF) project was set up. Funded by the EU, the project aims to develop an economic model using state-of-the-art techniques in dynamic macroeconomics.

The model being designed by FISINF will be used to analyse various effects of Europe's informal sector. Specifically, the project will examine how the informal economy affects fiscal policy and, therefore, economic growth and total productivity over the business cycle.

Research work is being carried out in three stages. Initially, the project is collecting and arranging data on the key variables involved, such as gross domestic product (GDP) and institutional control variables for European countries.

At the end of the first stage, the FISINF project will conduct an empirical analysis of the data collected. A theoretical model will be designed during the project's third stage in an effort to understand the economic mechanism behind FISINF's observations.

Once the first two stages have been completed, the economic model will be built and calibrated. Using the model simulations, various policy scenarios can then be examined for their effect on reducing the informal sector's size and scope. The results will be key in helping to reduce the size of this ever-growing sector and its related tax and social security avoidance issues across the EU.