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

Abstract

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