Shadow Economy and Tax Evasion: A Panel VAR approach. The Case of E.U.27
AbstractThe paper investigates the biunivoque relationship between shadow economy (s) and tax evasion (t), considering a panel data-series, from 1997 to 2005, in the case of European Union 27 (E.U.27) countries. The empirical results show that: (1) A positive 1% impulse in s determines a strong descendent reaction of t on short term (first 2-3 years), becoming “aggressive descendent” on the medium and long term, and (2) A positive 1% impulse in t determines a very low ascendant reaction of s’s level on medium and long term. The main finding reveals that the relationship between shadow economy and tax evasion has different amplitude and signs.
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Bibliographic InfoArticle provided by Weissberg Publishing in its journal Economic Research Guardian.
Volume (Year): 1 (2011)
Issue (Month): 1 (September)
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Shadow economy; Tax evasion; Effects; Panel VAR;
Find related papers by JEL classification:
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
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