Asymmetric Information, Tax Evasion and Alternative Instruments of Government Revenue
AbstractUsing a pure-exchange overlapping generations model, characterized with tax evasion and information asymmetry between the government (the social planner) and the financial intermediaries, the author discusses the optimal tax and seigniorage plans, derived from the welfare maximizing objective of the social planner. It is observed that irrespective of whether the economy is characterized by tax evasion or asymmetric information, a benevolent social planner maximizing welfare and simultaneously financing the budget constraint, should optimally rely on explicit, rather than implicit taxation.
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Bibliographic InfoArticle provided by IUP Publications in its journal The IUP Journal of Monetary Economics.
Volume (Year): IV (2006)
Issue (Month): 1 (February)
Pages: 75 - 89
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Other versions of this item:
- Rangan Gupta, 2005. "Asymmetric Information, Tax Evasion and Alternative Instruments of Government Revenue," Working papers 2005-33, University of Connecticut, Department of Economics.
- E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
- E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
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