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Tax evasion and growth

Author

Listed:
  • Matthias Wrede

    (Department of Economics, University of Bamberg, Germany)

Abstract

In an overlapping generations model, in which savings and tax evasion are endogenous, tax evasion will have a negative effect on long-term growth if public services are productive inputs for private producers. It is shown in the paper that tax evasion reduces the endogenous growth rate. Moreover; the case of pure public consumption is considered. Growth is then exogenous at the steady state path. It is found out that the effect ofa tax-enforcement parameter change on the longrun equilibrium heavily depends on the intertemporal elasticity of substitution.

Suggested Citation

  • Matthias Wrede, 1995. "Tax evasion and growth," Finnish Economic Papers, Finnish Economic Association, vol. 8(2), pages 82-90, Autumn.
    • Handle: RePEc:fep:journl:v:8:y:1995:i:2:p:82-90
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    References listed on IDEAS

    as
    1. Gylfason, T., 1993. "Optimal Saving, Interest Rates and Endogenous Growth," Papers 539, Stockholm - International Economic Studies.
    2. Gylfason, Thorvaldur, 1993. " Optimal Saving, Interest Rates, and Endogenous Growth," Scandinavian Journal of Economics, Wiley Blackwell, vol. 95(4), pages 517-533, December.
    3. Andersen, Per, 1977. " Tax Evasion and Labor Supply," Scandinavian Journal of Economics, Wiley Blackwell, vol. 79(3), pages 375-383.
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    Cited by:

    1. Eichhorn, Christoph, 2006. "Optimal Policies in the Presence of Tax Evasion," Munich Dissertations in Economics 5586, University of Munich, Department of Economics.

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    More about this item

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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