Tax evasion and growth
In an overlapping generations model, in which savings and tax evasion are endogenous, tax evasion will have a negative effect on long-term growth if public services are productive inputs for private producers. It is shown in the paper that tax evasion reduces the endogenous growth rate. Moreover; the case of pure public consumption is considered. Growth is then exogenous at the steady state path. It is found out that the effect ofa tax-enforcement parameter change on the longrun equilibrium heavily depends on the intertemporal elasticity of substitution.
Volume (Year): 8 (1995)
Issue (Month): 2 (Autumn)
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- Gylfason, T., 1993. "Optimal Saving, Interest Rates and Endogenous Growth," Papers 539, Stockholm - International Economic Studies.
- Andersen, Per, 1977. " Tax Evasion and Labor Supply," Scandinavian Journal of Economics, Wiley Blackwell, vol. 79(3), pages 375-383.
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