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

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  • Chiumya, Chiza

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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Bibliographic 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;

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References

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  1. 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.
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  4. Fethi Ogunc & Gokhan Yilmaz, 2000. "Estimating The Underground Economy In Turkey," Discussion Papers 0004, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
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  7. Konstantine Pashev, 2005. "Tax Compliance of Small Business in Transition Economies: Lessons from Bulgaria," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0510, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  8. David Giles & Lindsay Tedds & Gugsa Werkneh, 2002. "The Canadian underground and measured economies: Granger causality results," Applied Economics, Taylor & Francis Journals, vol. 34(18), pages 2347-2352.
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Cited by:
  1. Makochekanwa, Albert, 2010. "Estimating the size and trends of the second economy in Zimbabwe," MPRA Paper 37807, University Library of Munich, Germany.

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