Tax Evasion in a Model of Endogenous Growth
This paper integrates tax evasion into a standard AK growth model with public capital. In the model, the government optimizes the tax rate, while individuals optimize tax evasion. It studies tax rate, tax evasion and economic growth, and compares them with otherwise identical economies except those without tax evasion. It inquires into the effects of three government policies on tax rate, tax evasion, and economic growth. It finds that an increase in both unit cost of tax evasion and punishmentâ€“fines reduces tax evasion, whereas an increase in tax auditing reduces tax evasion only if the cost of tax enforcement is not too high. The three policies theoretically have ambiguous effects upon economic growth, due to their indirect effects upon tax evasion and optimal tax rate. The model is calibrated to quantitatively assess the effects of the three above-mentioned policies. It finds that the three policies are quantitatively effective in discouraging tax evasion, but with small growth effects, unless the degree of government externality is very high. (Copyright: Elsevier)
Volume (Year): 6 (2003)
Issue (Month): 2 (April)
|Contact details of provider:|| Postal: |
Web page: http://www.EconomicDynamics.org/review.htm
More information through EDIRC
|Order Information:|| Web: http://www.EconomicDynamics.org/RED17.htm Email: |
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.:
- Barreto, Raul A., 2000. "Endogenous corruption in a neoclassical growth model," European Economic Review, Elsevier, vol. 44(1), pages 35-60, January.
- Romer, Paul M, 1986.
"Increasing Returns and Long-run Growth,"
Journal of Political Economy,
University of Chicago Press, vol. 94(5), pages 1002-37, October.
- Edgar L. Feige, 2004. "How Big IS the Irregular Economy?," Macroeconomics 0404005, EconWPA.
- Andreoni, J., 1989.
"Reasonable Doubt And The Optimal Magnitude Of Fines: Should The Penalty Fit The Crime,"
8908, Wisconsin Madison - Social Systems.
- James Andreoni, 1991. "Reasonable Doubt and the Optimal Magnitude of Fines: Should the Penalty Fit the Crime?," RAND Journal of Economics, The RAND Corporation, vol. 22(3), pages 385-395, Autumn.
- Futagami, Koichi & Morita, Yuichi & Shibata, Akihisa, 1993. " Dynamic Analysis of an Endogenous Growth Model with Public Capital," Scandinavian Journal of Economics, Wiley Blackwell, vol. 95(4), pages 607-25, December.
- Leung, S.F., 1993.
"Dynamic Deterence Theory,"
RCER Working Papers
366, University of Rochester - Center for Economic Research (RCER).
- Mirrlees, James A, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Wiley Blackwell, vol. 38(114), pages 175-208, April.
- Eric W. Bond & Ping Wang & Chong K. Yip, 1993.
"A general two-sector model of endogenous growth with human and physical capital: balanced growth and transitional dynamics,"
9324, Federal Reserve Bank of Dallas.
- Bond, Eric W. & Wang, Ping & Yip, Chong K., 1996. "A General Two-Sector Model of Endogenous Growth with Human and Physical Capital: Balanced Growth and Transitional Dynamics," Journal of Economic Theory, Elsevier, vol. 68(1), pages 149-173, January.
- Davis, Michael L, 1988. "Time and Punishment: An Intertemporal Model of Crime," Journal of Political Economy, University of Chicago Press, vol. 96(2), pages 383-90, April.
- David Aschauer, 1988.
"Is public expenditure productive?,"
88-7, Federal Reserve Bank of Chicago.
- Don Fullerton & Marios Karayannis, 1993.
"Tax Evasion and the Allocation of Capital,"
NBER Working Papers
4581, National Bureau of Economic Research, Inc.
- Jones, Larry E & Manuelli, Rodolfo E & Rossi, Peter E, 1993. "Optimal Taxation in Models of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 485-517, June.
- Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
- Barro, Robert J, 1990.
"Government Spending in a Simple Model of Endogenous Growth,"
Journal of Political Economy,
University of Chicago Press, vol. 98(5), pages S103-26, October.
- Barro, Robert J., 1990. "Government Spending in a Simple Model of Endogeneous Growth," Scholarly Articles 3451296, Harvard University Department of Economics.
- Barro, R.J., 1988. "Government Spending In A Simple Model Of Endogenous Growth," RCER Working Papers 130, University of Rochester - Center for Economic Research (RCER).
- Robert J. Barro, 1988. "Government Spending in a Simple Model of Endogenous Growth," NBER Working Papers 2588, National Bureau of Economic Research, Inc.
- Mitchell Polinsky, A. & Rubinfeld, Daniel L., 1991.
"A model of optimal fines for repeat offenders,"
Journal of Public Economics,
Elsevier, vol. 46(3), pages 291-306, December.
- Jones, Larry E & Manuelli, Rodolfo E, 1990. "A Convex Model of Equilibrium Growth: Theory and Policy Implications," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1008-38, October.
- Roubini, Nouriel & Sala-i-Martin, Xavier, 1995.
"A growth model of inflation, tax evasion, and financial repression,"
Journal of Monetary Economics,
Elsevier, vol. 35(2), pages 275-301, April.
- Nouriel Roubini & Xavier Sala-i-Martin, 1992. "A Growth Model of Inflation, Tax Evasion, and Financial Repression," NBER Working Papers 4062, National Bureau of Economic Research, Inc.
- Roubini, N. & Sala-i-Martin, X., 1992. "A Growth Model of Inflation, Tax Evasion and Financial Repression," Papers 658, Yale - Economic Growth Center.
- Sergio T. Rebelo, 1990.
"Long Run Policy Analysis and Long Run Growth,"
NBER Working Papers
3325, National Bureau of Economic Research, Inc.
- Chu, C Y Cyrus, 1990. "A Model of Income Tax Evasion with Venal Tax Officials: The Case of Taiwan," Public Finance = Finances publiques, , vol. 45(3), pages 392-408.
- Chen, Been-Lon & Shimomura, Koji, 1998. "Self-Fulfilling Expectations and Economic Growth: A Model of Technology Adoption and Industrialization," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(1), pages 151-70, February.
- Michele Boldrin & Aldo Rustichini, 2000. "Political Equilibria with Social Security," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(1), pages 41-78, January.
- Huang, Peter H & Wu, Ho-Mou, 1994. "More Order without More Law: A Theory of Social Norms and Organizational Cultures," Journal of Law, Economics and Organization, Oxford University Press, vol. 10(2), pages 390-406, October.
- Snyder, Edward A, 1990. "The Effect of Higher Criminal Penalties on Antitrust Enforcement," Journal of Law and Economics, University of Chicago Press, vol. 33(2), pages 439-62, October.
- Cowell, F A, 1990. "Tax Sheltering and the Cost of Evasion," Oxford Economic Papers, Oxford University Press, vol. 42(1), pages 231-43, January.
- Jung, Young H. & Snow, Arthur & Trandel, Gregory A., 1994. "Tax evasion and the size of the underground economy," Journal of Public Economics, Elsevier, vol. 54(3), pages 391-402, July.
- Chander, Parkash & Wilde, Louis, 1992. "Corruption in tax administration," Journal of Public Economics, Elsevier, vol. 49(3), pages 333-349, December.
- Schroyen, Fred, 1997. "Pareto efficient income taxation under costly monitoring," Journal of Public Economics, Elsevier, vol. 65(3), pages 343-366, September.
When requesting a correction, please mention this item's handle: RePEc:red:issued:v:6:y:2003:i:2:p:381-403. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Zimmermann)
If references are entirely missing, you can add them using this form.