Asymmetric Information, Tax Evasion and Alternative Instruments of Government Revenue
AbstractUsing a pure-exchange overlapping generations model, characterized with tax evasion and information asymmetry between the government (the social planner) and the financial intermediaries, we try and seek for the optimal tax and seigniorage plans, derived from the welfare maximizing objective of the social planner. We show that irrespective of whether the economy is characterized by tax evasion, or asymmetric information, a benevolent social planner, maximizing welfare and simultaneously financing the budget constraint, should optimally rely on explicit rather than implicit taxation.
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Bibliographic InfoPaper provided by University of Connecticut, Department of Economics in its series Working papers with number 2005-33.
Length: 22 pages
Date of creation: Jul 2005
Date of revision:
Note: This is a revised version of the fourth chapter of my dissertation at the University of Connecticut. I am particularly grateful to my advisors Christian Zimmermann and Dhammika Dharmapala for many helpful comments and discussions. All remaining errors are mine.
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More information through EDIRC
Tax evasion; Information Asymmetry in Financial Markets;
Other versions of this item:
- Rangan Gupta, 2006. "Asymmetric Information, Tax Evasion and Alternative Instruments of Government Revenue," The IUP Journal of Monetary Economics, IUP Publications, vol. 0(1), pages 75 - 89, February.
- E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
- E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-09-11 (All new papers)
- NEP-DGE-2005-09-11 (Dynamic General Equilibrium)
- NEP-MAC-2005-09-11 (Macroeconomics)
- NEP-PBE-2005-09-11 (Public Economics)
- NEP-PUB-2005-09-11 (Public Finance)
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