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Endogenous Corruption and Tax Evasion in a Dynamic Model

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Abstract

When the government provides public services necessary to production tax evasion results in some degree of income redistribution which may imply an higher or a lower level of aggregate income in the longrun. The outcome mainly depends on the burden of …scal pressure. If the tax administration is harmed by corruptibility of some agents then the performance of the economy is also a¤ected by the di¤usion of corruption, its impact depending upon the cost of detecting a bribe agreement. When such cost varies with the stage of development, as it happens if the latter determines the level of transparency, then poverty traps may emerge and the steady state level of income will depend on the initial condition. Some implications of the model are in line with recent empirical evidence.

Suggested Citation

  • Antonio Acconcia, 2006. "Endogenous Corruption and Tax Evasion in a Dynamic Model," CSEF Working Papers 154, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 01 Nov 2006.
  • Handle: RePEc:sef:csefwp:154
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    References listed on IDEAS

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    1. Barreto, Raul A., 2000. "Endogenous corruption in a neoclassical growth model," European Economic Review, Elsevier, vol. 44(1), pages 35-60, January.
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    Cited by:

    1. Michele Caputo & Francesco Forte & Michela Mantovani, 2014. "Long-run and shorter-run criminal cycles in the public economics of public bads," Chapters,in: A Handbook of Alternative Theories of Public Economics, chapter 22, pages 503-542 Edward Elgar Publishing.
    2. Francesco Forte & Ram Mudambi & Pietro Maria Navarra (ed.), 2014. "A Handbook of Alternative Theories of Public Economics," Books, Edward Elgar Publishing, number 14898.
    3. Dzhumashev, Ratbek, 2008. "Corruption and Disposable Risk," MPRA Paper 11772, University Library of Munich, Germany.
    4. Ratbek Dzhumashev, 2007. "Corruption, Uncertainty And Growth," Monash Economics Working Papers 15-07, Monash University, Department of Economics.
    5. Rosato, Antonio, 2006. "An Attempt to Control Tax Evasion," MPRA Paper 15084, University Library of Munich, Germany, revised 07 May 2009.
    6. Djumashev, R, 2007. "Corruption, uncertainty and growth," MPRA Paper 3716, University Library of Munich, Germany.

    More about this item

    Keywords

    Tax evasion; corruption; public spending; poverty traps;

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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