David E. A. Giles

Measuring the Hidden Economy: Implications for Econometric Modelling

In this paper I support using econometric techniques to measure the size of the hidden (underground) economy, because such information is important for the construction of certain economic models, and for empirical policy analysis. Generally, detailed information on the output of the hidden economy is unavailable. Even where careful measures of the underground economy have been constructed, usually these data are available only periodically. Important exceptions are the classic results of Tanzi (1983) for the United States, and Bhattacharyyas (1990) series for the United Kingdom. In the case of the New Zealand economy, a time-series of data on the hidden economy has been generated recently (Giles, 1997a). This provides the unusual opportunity to undertake econometric modelling in a way which takes account of such activity formally. Moreover, we can examine the policy implications arising from the linkages between hidden output and various measured economic aggregates.

Modelling the Hidden Economy and the Tax-Gap in New Zealand

This paper develops and estimates a structural, latent variable, model for the hidden economy in New Zealand, and a separate currency-demand model. The estimated latent variable model is used to generate an historical time-series index of hidden economic activity, which is calibrated via the information from the currency-demand model. Special attention is paid to data non-stationarity, and to diagnostic testing. Over the period 1968 to 1994, the size of the hidden economy is found to vary between 6.8% and 11.3% of measured GDP. This, in turn, implies that the total tax-gap is of the order of 6.4% to 10.2% of total tax liability in that country. Of course, not all of this foregone revenue would be recoverable, as not all of the activity in the underground economy is responsive to changes in taxation or other policies.

Far-field continental backarc setting for the 1.80–1.67 Ga basins of northeastern Australia

The 1.80–1.67 Ga volcano-sedimentary basins of northeastern Australia, preserved in the Mount Isa inlier, McArthur basin, and Georgetown inlier, have been a cornerstone of nonuniformitarian “intracontinental” tectonic models of the Australian Proterozoic. However, geochronological data show that major tectonothermal events within the basins coincided with significant tectonic events that occurred along a complex convergent plate boundary that developed on the southern margin of the proto–Australian continent. These data imply a paired evolution, whereby thermal events were shared and plate-margin stresses were propagated (to 1500 km) into the plate interior. We propose a tectonic model in which the 1.80–1.67 Ga northeastern Australian basins occupied a wide region of intermittently extending continental crust in the overriding plate of a long-lived subduction system—effectively a far-field continental backarc setting. The combined effects of slab rollback, accretion, and enhanced subcontinental convection produced an environment of episodic extension, transient shortening, elevated heat flow, and magmatism.

Synthesis of the proterozoic evolution of the Mt Isa Inlier

By virtue of its large area of exposure of different crustal levels, and preservation of a protracted (∼400 million years) Palaeoproterozoic to Mesoproterozoic tectonic evolution, the Mt Isa Inlier is an excellent natural laboratory to study Proterozoic tectonic processes. The inlier preserves evidence of intracontinental basin development, plutonism, low-pressure metamorphism, orogenesis at different crustal levels, and crustal-scale metasomatism. In addition, the Mt Isa Inlier is endowed with a variety of ore deposits, including the Mt Isa Pb – Zn – Ag and Cu deposits, Century Zn – Pb – Ag deposit, Cannington Ag – Pb – Zn deposit, and the Osborne and Ernest Henry iron oxide Cu – Au deposits. Basement rocks were deformed and metamorphosed during the ca 1900 – 1870 Ma Barramundi Orogeny and intruded by the granitic rocks of the ca 1850 Ma Kalkadoon and Ewen Batholiths and their coeval Leichhardt Volcanics. Three stacked and superimposed superbasins evolved between ca 1800 and ca 1595 Ma. These basins evolved in an environment characterised by elevated heat flow and transient episodes of magmatism and basin inversion in an inferred continental backarc setting. The ca 1600 – 1500 Ma Isan Orogeny probably records two phases of orogenesis. The first phase (ca 1600 – 1570 Ma) involved approximately north – south to northwest – southeast shortening in which a northwest-vergent fold-thrust belt evolved in the Eastern Fold Belt and localised basin inversion occurred in the Western Fold Belt. The second phase (ca 1550 – 1500) involved thick-skinned deformation in the Eastern and Western Fold Belts, characterised by upright folding, reverse faulting, and dextral wrenching. Voluminous granites were emplaced throughout the Eastern Fold Belt between ca 1550 and 1500 Ma. Exhumation and cooling of the crustal pile following the Isan Orogeny were related to crustal extension and widespread erosion in eastern and southern Australia. Subtle reactivation of faults within the inlier following the Isan Orogeny records the distal effects of Mesoproterozoic to Neoproterozoic breakup events and orogenesis in central Australia.

SHRIMP U–Pb monazite dating of 1600–1580 Ma amphibolite facies metamorphism in the southeastern Mt Isa Block, Australia

SHRIMP U–Pb monazite dates of ca 1600–1580 Ma are reported from three samples taken from the southeastern margin of the Proterozoic Mt Isa Block. The samples include an upper amphibolite facies paragneiss and a pegmatite from the host sequence of the Cannington Ag–Pb–Zn deposit and a middle amphibolite facies metasediment from the Soldiers Cap Group near Maronan station. These dates are interpreted to represent the timing of amphibolite facies metamorphism at the southeastern margin of the Mt Isa Block. They are in accordance with the results of earlier SHRIMP U–Pb zircon and 40Ar/39Ar dating, which suggested that metamorphism in the southeastern Mt Isa Block occurred approximately 50 million years earlier than metamorphism in the western Mt Isa Block. This challenges the common perception of orogeny in the Mt Isa Block in which ‘peak metamorphism’, and the deformation events associated with it, can be correlated across the entire terrane.

Benford's law and naturally occurring prices in certain ebaY auctions

We show that certain winning bids for certain ebaY auctions obey Benfords Law. One implication of this is that it is unlikely that these bids are subjected to collusion among bidders, or ‘shilling’ on the part of sellers. Parenthetically, we also show that numbers from the naturally occurring Fibonacci and Lucas sequences also obey Benfords Law.

The Canadian underground and measured economies: Granger causality results

Using new time-series data for the size of the Canadian underground economy, the relationship between unreported and measured GDP in that country is examined. Granger causality tests are conducted, with a proper allowance for the non-stationarity of the data. It is found that there is clear evidence of such causality from measured GDP to ‘hidden’ output, but only very mild evidence of Granger causality in the reverse direction. This result supports similar evidence for New Zealand reported by the first author, and has several interesting policy implications.

Evolution of the Isan Orogeny at the southeastern margin of the Mt Isa Inlier

We present the results of field mapping, structural and metamorphic analysis in an area at the southeastern margin of the Mt Isa Inlier. The results provide insight into the evolution of the Isan Orogeny and a comparison with structural studies conducted along the line of the Mt Isa Deep Seismic Transect. Our observations are consistent with a two-stage orogenic scheme in which there was a transition from early thin-skinned to later thick-skinned deformation as the orogen evolved. Metasedimentary rocks of the Maronan Supergroup (ca 1700 – 1650 Ma) were deposited in a basin marginal to the presently exposed Mt Isa Inlier. They were then thrust toward the north and west during the early stages of shortening, ca 1600 – 1580 Ma. This produced an arcuate fold and thrust belt with east – west-trending folds in the east of the study area and north – south-trending folds in the west. Amphibolite to upper amphibolite facies, high-temperature – low-pressure metamorphic conditions, evidenced by garnet, andalusite and sillimanite porphyroblasts, were reached during the early phase of deformation. Subsequent deformation, ca 1550 – 1500 Ma, resulted in upright to steeply inclined folding of the earlier fabrics and steeply east-dipping reverse faults. This orogenic phase was characterised by the growth of staurolite in aluminous schists, and its subsequent replacement by biotite, consistent with a distinct cycle of prograde metamorphism at higher pressures than the first. Based on the differing orientation and style of structures and the association with separate metamorphic events, we argue that the two phases of deformation, ca 1600 – 1580 Ma and ca 1550 – 1500 Ma, represent discrete tectonic events that may have had different driving forces and boundary conditions.

The rise and fall of the New Zealand underground economy: are the responses symmetric?

Earlier research by the author indicates a causal relationship from measured real output in New Zealand, to output in the real underground economy. We investigate the possibility of asymmetries in this relationship, and test to see if the response of the underground economy to downturns in real GDP differs from the response to such upturns. No such evidence is found.

SHRIMP U–Pb zircon dating of the host rocks of the Cannington Ag–Pb–Zn deposit, southeastern Mt Isa Block, Australia

SHRIMP U–Pb zircon ages are reported from a paragneiss, a pegmatite, a metasomatised metasediment and an amphibolite taken from the upper amphibolite facies host sequence of the Cannington Ag–Pb–Zn deposit at the southeastern margin of the Proterozoic Mt Isa Block. Also reported are ages from a middle amphibolite‐facies metasediment from the Soldiers Cap Group approximately 90 km north of Cannington. The predominantly metasedimentary host rocks of the Cannington deposit were eroded from a terrane containing latest Archaean to earliest Palaeoproterozoic (ca 2600–2300 Ma) and Palaeoproterozoic (ca 1750–1700 Ma) zircon. The ca 1750–1700 Ma group of zircons are consistent with sedimentary provenance from rocks of Cover Sequence 2 age that are now exposed to the north and west of the Cannington deposit. The metasedimentary samples also include a group of zircon grains at ca 1675 Ma, which we interpret as the maximum depositional age of the sedimentary protolith. This is comparable to the maximum depositional age of the metasediment from the Maronan area (ca 1665 Ma) and to previously published data from the Soldiers Cap Group. Metamorphic zircon rims and new zircon grains grew at 1600–1580 Ma during upper amphibolite‐facies metamorphism in metasedimentary and mafic magmatic rocks. Zircon inheritance patterns suggest that sheet‐like pegmatitic intrusions were most likely derived from partial melting of the surrounding metasediments during this period of metamorphism. Some zircon grains from the amphibolite have a morphology consistent with partially recrystallised igneous grains and have apparent ages close to the metamorphic age, although it is not clear whether these represent metamorphic resetting or crystallisation of the magmatic protolith. Pb‐loss during syn‐ to post‐metamorphic metasomatism resulted in partial resetting of zircons from the metasomatised metasediment.