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Shadow economy and regional development - an argument in favor of fiscal decentralization

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  • Petranov, Stefan

Abstract

The article discusses the regional aspects of the shadow economy in Bulgaria. The main factors that generate motivation for shadow practices are considered and it is concluded that they operate mainly at the national level. It follows that measures to limit and prevent this phenomenon should be primarily national. However, the article argues that regional policies can also be used in this regard. A moderate fiscal decentralization can help to increase the tax morality which is one of the most slowly changing and most intractable factors generating motivation for the implementation of shadow practices. It is also argued that fiscal decentralization in Bulgaria has the potential to improve other aspects of the economic system.

Suggested Citation

  • Petranov, Stefan, 2021. "Shadow economy and regional development - an argument in favor of fiscal decentralization," MPRA Paper 111264, University Library of Munich, Germany, revised 15 Oct 2021.
    • Handle: RePEc:pra:mprapa:111264
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    File URL: https://mpra.ub.uni-muenchen.de/111264/8/MPRA_paper_111264.pdf
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    References listed on IDEAS

    as
    1. Ivanyna, Maksym & Shah, Anwar, 2014. "How close is your government to its people? Worldwide indicators on localization and decentralization," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 8, pages 1-61.
    2. repec:iza:izawol:journl:y:2015:p:127 is not listed on IDEAS
    3. Dominik H. Enste, 2018. "The shadow economy in industrial countries," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-11, November.
    4. Jorge Martinez-Vazquez & Santiago Lago-Peñas & Agnese Sacchi, 2017. "The Impact Of Fiscal Decentralization: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 31(4), pages 1095-1129, September.
    5. Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
    6. David Bartolini & Sibylle Stossberg & Hansjörg Blöchliger, 2016. "Fiscal Decentralisation and Regional Disparities," OECD Economics Department Working Papers 1330, OECD Publishing.
    7. Mr. Ben Kelmanson & Koralai Kirabaeva & Leandro Medina & Borislava Mircheva & Jason Weiss, 2019. "Explaining the Shadow Economy in Europe: Size, Causes and Policy Options," IMF Working Papers 2019/278, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    shadow economy; regional development; regional policies; fiscal decentralization; Bulgaria;
    All these keywords.

    JEL classification:

    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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