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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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  • Chiumya, Chiza, 2007. "The Parallel Economy in Malawi: Size, Effect on Tax Revenue and Policy Options," MPRA Paper 9860, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:9860
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    Cited by:

    1. Awadh Ahmed Mohammed Gamal & Jauhari Dahalan & K. Kuperan Viswanathan, 2020. "An econometric analysis of the underground economy and tax evasion in Kuwait," International Journal of Business and Globalisation, Inderscience Enterprises Ltd, vol. 25(3), pages 307-331.
    2. Manamba EPAPHRA & Moga Tano JILENGA, 2017. "Currency Demand, the Subterranean Economy and Tax Evasion: The Case of Tanzania," Journal of Economic and Social Thought, KSP Journals, vol. 4(2), pages 187-211, June.
    3. 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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    More about this item

    Keywords

    Parallel Economy; Official Economy; Tax Revenue;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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