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Tax evasion and financial repression: a reconsideration using endogenous growth models

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  • Rangan Gupta
  • Emmanuel Ziramba

Abstract

Purpose - This paper aims at developing a theoretical model of a world economy characterized by tax evasion. It seeks to analyze whether financial repression can be explained by tax evasion. Design/methodology/approach - The analysis is performed in overlapping generations dynamic general equilibrium endogenous monetary growth models. Findings - The paper shows that higher degree of tax evasion within a country, resulting from a higher level of corruption and a lower penalty rate, yields higher degrees of financial repression. Practical implications - Financial repression can be explained by tax evasion but under specific conditions. Originality/value - This is the first attempt to analyze financial repression and tax evasion in an endogenous growth model.

Suggested Citation

  • Rangan Gupta & Emmanuel Ziramba, 2009. "Tax evasion and financial repression: a reconsideration using endogenous growth models," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 36(6), pages 660-674, October.
    • Handle: RePEc:eme:jespps:v:36:y:2009:i:6:p:660-674
    DOI: 10.1108/01443580911001788
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Gupta, Rangan & Makena, Philton, 2020. "Why must it always be so Real with tax evasion?," The Quarterly Review of Economics and Finance, Elsevier, vol. 78(C), pages 304-308.
    2. Bittencourt, Manoel & Gupta, Rangan & Stander, Lardo, 2014. "Tax evasion, financial development and inflation: Theory and empirical evidence," Journal of Banking & Finance, Elsevier, vol. 41(C), pages 194-208.
    3. Rangan Gupta, 2011. "Currency Substitution and Financial Repression," International Economic Journal, Taylor & Francis Journals, vol. 25(1), pages 47-61.
    4. Rangan Gupta & Emmanuel Ziramba, 2008. "Costly Tax Enforcement and Financial Repression," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 37(2), pages 141-154, July.
    5. Rangan Gupta & Lardo Stander & Andrea Vaona, 2023. "Openness and growth: Is the relationship non‐linear?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 3071-3099, July.
    6. Rangan Gupta & Cobus Vermeulen, 2010. "Private and Public Health Expenditures in an Endogenous Growth Model with Inflation Targeting," Annals of Economics and Finance, Society for AEF, vol. 11(1), pages 139-153, May.
    7. Pavitra Dhamija, 2020. "Economic Development and South Africa: 25 Years Analysis (1994 to 2019)," South African Journal of Economics, Economic Society of South Africa, vol. 88(3), pages 298-322, September.
    8. Rangan Gupta & Emmanuel Ziramba, 2010. "Optimal public policy with endogenous mortality," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 13(3), pages 241-249.

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    More about this item

    Keywords

    Economics; Tax planning; Macroeconomics;
    All these keywords.

    JEL classification:

    • 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

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