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Estimating the Evolution of Tax Evasion: A Markov Chain Analysis Applied to the Czech Republic (in Czech)

Author

Listed:
  • Jan Hanousek

    () (Center for Research and Graduate Education - Economic Institute, Prague)

  • Filip Palda

    () (Ecole Nationale d'Administration Publique, Montreal, Canada)

Abstract

The paper demonstrates how survey methods and retrospective questions can be put to effective use in the study of shadow-economy dynamics; specifically, the evolution of tax evasion in the Czech Republic. The authors measure the average individual's transition between the shadow and official economy, and use these transition probabilities to predict the evolution of tax evasion with the help of tax-evasion surveys taken in 2000, 2002, and 2004. The authors´ results suggest that the shadow economy in the Czech Republic has flattened, and that a small decrease in the degree of evasion can be expected.

Suggested Citation

  • Jan Hanousek & Filip Palda, 2006. "Estimating the Evolution of Tax Evasion: A Markov Chain Analysis Applied to the Czech Republic (in Czech)," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 56(3-4), pages 127-151, March.
  • Handle: RePEc:fau:fauart:v:56:y:2006:i:3-4:p:127-151
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    File URL: http://journal.fsv.cuni.cz/storage/1049_s_127_151.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    informal economy; shadow economy; tax evasion; transition;

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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