The Examination of Fiscal Origins of Black Economy by Panel Threshold Model: The Effect of Government Size within the Context of Regulation Efficiency


SOSYOEKONOMI, vol.29, no.47, pp.141-158, 2021 (Journal Indexed in ESCI) identifier

  • Publication Type: Article / Article
  • Volume: 29 Issue: 47
  • Publication Date: 2021
  • Doi Number: 10.17233/sosyoekonomi.2021.01.07
  • Title of Journal : SOSYOEKONOMI
  • Page Numbers: pp.141-158


The purpose of this study is twofold. Firstly, we aim to examine the fiscal determinants of the black economy for 26 economies over 2000-2017 by utilizing a linear approach. Secondly, in parallel to the linear model findings, we seek to investigate the impact of government size on the black economy under two regimes with different regulation efficiencies using a panel threshold model. Our results indicate that government size has no significant effect on the black economy when the regulation efficiency is below the threshold level. On the other hand, when the government regulations are relatively more efficient, we find evidence supporting the significant and negative impact of government size on the black economy.