Endogenous Corruption and Tax Evasion in a Dynamic Model
AbstractWhen the government provides public services necessary to production tax evasion results in some degree of income redistribution which may imply an higher or a lower level of aggregate income in the longrun. The outcome mainly depends on the burden of …scal pressure. If the tax administration is harmed by corruptibility of some agents then the performance of the economy is also a¤ected by the di¤usion of corruption, its impact depending upon the cost of detecting a bribe agreement. When such cost varies with the stage of development, as it happens if the latter determines the level of transparency, then poverty traps may emerge and the steady state level of income will depend on the initial condition. Some implications of the model are in line with recent empirical evidence.
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Bibliographic InfoPaper provided by Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy in its series CSEF Working Papers with number 154.
Date of creation: 01 Jan 2006
Date of revision: 01 Nov 2006
Tax evasion; corruption; public spending; poverty traps;
Find related papers by JEL classification:
- D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-02-05 (All new papers)
- NEP-LAW-2006-02-05 (Law & Economics)
- NEP-PBE-2006-02-05 (Public Economics)
- NEP-REG-2006-02-05 (Regulation)
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