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Liberalization and tax amnesty in a developing economy


  • Bose, Pinaki
  • Jetter, Michael


We show that tax evaders can respond to a tax amnesty, even if enforcement activities do not change, if it is timed to coincide with liberalization and rising incomes. The success of the amnesty, in terms of its effect on tax revenue and welfare, depends on the distribution of the gains from liberalization. Our analysis provides a theoretical justification of the link between successful amnesties and economic liberalization and points to factors that a policy maker should consider for success of future amnesties.

Suggested Citation

  • Bose, Pinaki & Jetter, Michael, 2012. "Liberalization and tax amnesty in a developing economy," Economic Modelling, Elsevier, vol. 29(3), pages 761-765.
  • Handle: RePEc:eee:ecmode:v:29:y:2012:i:3:p:761-765 DOI: 10.1016/j.econmod.2012.01.017

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    References listed on IDEAS

    1. Arindam Das Gupta & Dilip Mookherjee, 1995. "Tax Amnesties in India; An Empirical Evaluation," Boston University - Institute for Economic Development 53, Boston University, Institute for Economic Development.
    2. Keller, Wolfgang, 2000. "Do Trade Patterns and Technology Flows Affect Productivity Growth?," World Bank Economic Review, World Bank Group, vol. 14(1), pages 17-47, January.
    3. Koujianou Goldberg, Pinelopi & Pavcnik, Nina, 2003. "The response of the informal sector to trade liberalization," Journal of Development Economics, Elsevier, vol. 72(2), pages 463-496, December.
    4. Peter J. Buckley & Frances Ruane, 2006. "Foreign Direct Investment in Ireland: Policy Implications for Emerging Economies," The World Economy, Wiley Blackwell, vol. 29(11), pages 1611-1628, November.
    5. Kamal Saggi, 2002. "Trade, Foreign Direct Investment, and International Technology Transfer: A Survey," World Bank Research Observer, World Bank Group, vol. 17(2), pages 191-235, September.
    6. Wolfgang Keller, 2004. "International Technology Diffusion," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 752-782, September.
    7. Elliot Uchitelle, 1989. "The effectiveness of tax amnesty programs in selected countries," Quarterly Review, Federal Reserve Bank of New York, issue Aut, pages 48-53.
    8. Andreoni, James, 1991. "The desirability of a permanent tax amnesty," Journal of Public Economics, Elsevier, vol. 45(2), pages 143-159, July.
    9. Malik, Arun S. & Schwab, Robert M., 1991. "The economics of tax amnesties," Journal of Public Economics, Elsevier, vol. 46(1), pages 29-49, October.
    10. Jörg MAYER, 2001. "Technology Diffusion, Human Capital And Economic Growth In Developing Countries," UNCTAD Discussion Papers 154, United Nations Conference on Trade and Development.
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