The Binary Choice Approach of Laffer Curve
AbstractThe paper analyzes empirically, based on “Laffer effects”, in Romania’s case, the relationship between tax revenues (dependent variable) and tax rates (independent variables). The analysis is based on the construction of a binary choice model (Linear Probit Model) and the data set is covering the period 1999 - 2009 (first trimester), with quarterly frequency. The main results show that the two “Laffer effects” have a different probability of existence. If the government knows which the maximum probabilities are for each of the two effects, then he can construct a coherent tax policy arrangement that raise or decrease the tax revenues, based on flat or progressive tax systems (the tax evasion is considered to be constant).
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Bibliographic InfoPaper provided by West University of Timisoara, Romania, Faculty of Economics and Business Administration in its series FEAA Working Papers with number 2012.FEAA.F.01.
Length: 12 pages
Date of creation: 10 Apr 2012
Date of revision:
Contact details of provider:
Postal: Str. J.H.Pestalozzi nr. 16, 300115, Timisoara
Phone: 004 0256 592506
Fax: 004 0256 5925002
Web page: http://www.feaa.uvt.ro/ro/cercetare/feaa-working-papers.html
More information through EDIRC
Tax revenues; Tax rates; Laffer curve; Effects; Probability; Probit analysis;
Find related papers by JEL classification:
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-07-29 (All new papers)
- NEP-IUE-2012-07-29 (Informal & Underground Economics)
- NEP-PBE-2012-07-29 (Public Economics)
- NEP-PUB-2012-07-29 (Public Finance)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Cerqueti, Roy & Coppier, Raffaella, 2009. "Tax revenues, fiscal corruption and "shame" costs," Economic Modelling, Elsevier, vol. 26(6), pages 1239-1244, November.
- Ira N. Gang & Amal Sanyal & Omkar Goswami, 1998.
"Corruption, Tax Evasion and the Laffer Curve,"
Departmental Working Papers
199604, Rutgers University, Department of Economics.
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