Tax Evasion and Dynamic Inefficiency
AbstractI show within a two-period overlapping generations model with income tax evasion that when the penalty rate set by the government is su¢ ciently small, it is theoretically possible for the capital stock to exceed the golden-rule level on the balanced-growth path. However, such a dynamic inefficiency cannot be guaranteed when the probability of evasion detection is nil.
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Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 29 (2009)
Issue (Month): 1 ()
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Find related papers by JEL classification:
- D9 - Microeconomics - - Intertemporal Choice and Growth
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
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