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Tackling the debt crisis in Greece: The role of the underground economy

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George Manolas, George Sfakianakis, Ioannis Vavouras
George Manolas, George Sfakianakis, Ioannis Vavouras


This paper aims at assessing the relative
importance of the underground or shadow
or hidden economy in the effort of tackling
the current debt crisis. Examining the case
of Greece, one of the EU countries that face
serious sovereign debt problems, we emphasize
the importance of controlling the hidden
economic activity, that is of incorporating
it into the official economy. Moreover, by
analyzing the factors affecting the part of the
economic activity which takes place outside
the official sector, we evaluate the potential
gains Greece could have obtained in case it
could have converged to the best practice or
even the average levels of the determining
factors of the hidden economy prevailing in
the rest of the OECD countries.


Underground economy; tax evasion; governance; regulation; tax burden

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