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The Parallel Economy in Malawi: Size, Effect on Tax Revenue and Policy Options

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Author Info
Chiumya, Chiza

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Abstract

This study looks at the dynamics of the Parallel Economy. I estimate the size of the Parallel Economy in Malawi and its relationship with Tax Revenues. The Parallel Economy in Malawi was 12.3%, 23.1% and 17.3% of GDP in the 1970s, 1980s, and 1990s respectively. Income Taxes were a major driver of the Parallel Economy as compared to Import and Consumption Taxes. An increase in Tax Revenue led to an increase in the Parallel Economy and a decrease in tax Revenue led to a decrease in the Parallel Economy.

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File URL: http://mpra.ub.uni-muenchen.de/9860/
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Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 9860.

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Date of creation: 12 Mar 2007
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Handle: RePEc:pra:mprapa:9860

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Related research
Keywords: Parallel Economy; Official Economy; Tax Revenue;

Find related papers by JEL classification:
H2 - Public Economics - - Taxation, Subsidies, and Revenue

References listed on IDEAS
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  1. Maurizio Bovi, 2004. "An Improvement Of The Tanzi Method For The Estimation Of Italian Ungerground Economy," Public Economics 0404009, EconWPA. [Downloadable!]
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    Other versions:
  3. Jan Hanousek & Filip Palda, 2004. "Mission Implausible III: Measuring the Informal Sector in a Transition Economy using Macro Methods1," William Davidson Institute Working Papers Series 2004-683, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
    Other versions:
  4. Friedrich Schneider & Dominik Enste, 2000. "Shadow Economies Around the World - Size, Causes, and Consequences," IMF Working Papers 00/26, International Monetary Fund.
    Other versions:
  5. Friedman, Eric & Johnson, Simon & Kaufmann, Daniel & Zoido-Lobaton, Pablo, 2000. "Dodging the grabbing hand: the determinants of unofficial activity in 69 countries," Journal of Public Economics, Elsevier, vol. 76(3), pages 459-493, June. [Downloadable!] (restricted)
  6. Klarita Gërxhani, 2004. "The Informal Sector in Developed and Less Developed Countries: A Literature Survey," Public Choice, Springer, vol. 120(3_4), pages 267-300, 09. [Downloadable!]
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    Other versions:
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