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The Parallel Economy in Malawi: Size, Effect on Tax Revenue and Policy Options

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  • Chiumya, Chiza

Abstract

This study looks at the dynamics of the Parallel Economy. I estimate the size of the Parallel Economy in Malawi and its relationship with Tax Revenues. The Parallel Economy in Malawi was 12.3%, 23.1% and 17.3% of GDP in the 1970s, 1980s, and 1990s respectively. Income Taxes were a major driver of the Parallel Economy as compared to Import and Consumption Taxes. An increase in Tax Revenue led to an increase in the Parallel Economy and a decrease in tax Revenue led to a decrease in the Parallel Economy.

Suggested Citation

  • Chiumya, Chiza, 2007. "The Parallel Economy in Malawi: Size, Effect on Tax Revenue and Policy Options," MPRA Paper 9860, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:9860
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    References listed on IDEAS

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    Cited by:

    1. repec:ksp:journ3:v:4:y:2017:i:2:p:187-211 is not listed on IDEAS
    2. Makochekanwa, Albert, 2010. "Estimating the size and trends of the second economy in Zimbabwe," MPRA Paper 37807, University Library of Munich, Germany.

    More about this item

    Keywords

    Parallel Economy; Official Economy; Tax Revenue;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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