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Shadow economy and tax revenue in Africa

  • Kodila-Tedika, Oasis
  • Mutascu, Mihai

The paper explores the effects of shadow economy on tax revenues, in the case of several African countries, based on a panel-model approach. The data-set covers the period 1999-2007. The main results reveal that the shadow economy has a significant and negative impact on tax revenues. In other word, when the shadow economy tends to extend, the level of tax revenues decreases. These outputs show that the African governments, in order to maximise the collected tax revenues, should better “control” the shadow economy phenomenon.

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File URL: http://mpra.ub.uni-muenchen.de/50812/1/MPRA_paper_50812.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 50812.

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Date of creation: 2013
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Handle: RePEc:pra:mprapa:50812
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  1. Axel Dreher & Friedrich G. Schneider, 2006. "Corruption and the shadow economy: An empirical analysis," Economics working papers 2006-03, Department of Economics, Johannes Kepler University Linz, Austria.
  2. Richard M. Bird & Jorge Martinez-Vazquez & Benno Torgler, 2004. "Societal Institutions and Tax Effort in Developing Countries," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0406, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  3. Schneider, Friedrich & Buehn, Andreas & Montenegro, Claudio E., 2010. "Shadow economies all over the world : new estimates for 162 countries from 1999 to 2007," Policy Research Working Paper Series 5356, The World Bank.
  4. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2002. "Instrumental variables and GMM: Estimation and testing," North American Stata Users' Group Meetings 2003 05, Stata Users Group.
  5. Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
  6. Ummad Mazhar & Pierre-Guillaume Méon, 2012. "Taxing the unobservable: The impact of the shadow economy on inflation and taxation," Working Papers CEB 12-023, ULB -- Universite Libre de Bruxelles.
  7. Dani Rodrik, 1996. "Why Do More Open Economies Have Bigger Governments?," NBER Working Papers 5537, National Bureau of Economic Research, Inc.
  8. de V. Cavalcanti, Tiago V. & Villamil, Anne P., 2003. "Optimal Inflation Tax And Structural Reform," Macroeconomic Dynamics, Cambridge University Press, vol. 7(03), pages 333-362, June.
  9. Klovland, Jan Tore, 1984. " Tax Evasion and the Demand for Currency in Norway and Sweden. Is There a Hidden Relationship?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 86(4), pages 423-39.
  10. David Roodman, 2006. "How to Do xtabond2: An Introduction to "Difference" and "System" GMM in Stata," Working Papers 103, Center for Global Development.
  11. Johnson, Simon & Kaufmann, Daniel & Zoido-Lobaton, Pablo, 1998. "Regulatory Discretion and the Unofficial Economy," American Economic Review, American Economic Association, vol. 88(2), pages 387-92, May.
  12. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  13. Kaufmann, Daniel & Kaliberda, Aleksander, 1996. "Integrating the unofficial economy into the dynamics of post-socialist economies : a framework of analysis and evidence," Policy Research Working Paper Series 1691, The World Bank.
  14. Levin, Mark & Satarov, Georgy, 2000. "Corruption and institutions in Russia," European Journal of Political Economy, Elsevier, vol. 16(1), pages 113-132, March.
  15. Schneider, Friedrich, 2005. "Shadow economies around the world: what do we really know?," European Journal of Political Economy, Elsevier, vol. 21(3), pages 598-642, September.
  16. Koreshkova, Tatyana A., 2006. "A quantitative analysis of inflation as a tax on the underground economy," Journal of Monetary Economics, Elsevier, vol. 53(4), pages 773-796, May.
  17. Nicolini, Juan Pablo, 1998. "Tax evasion and the optimal inflation tax," Journal of Development Economics, Elsevier, vol. 55(1), pages 215-232, February.
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