Shadow economy and its relations with tax system and state budget in Poland 1995 - 2007
In this paper, results of the research on measurement of shadow economy in Poland in the period 1995 - 2007 are presented. This research is motivated by controversial existing estimates. First, some definitions of shadow economy are reviewed. Then, on the basis of monetary methods, an econometric model for currency demand is built. Using estimation results, the size of shadow economy is assessed. According to these estimates shadow economy declined in the period 1995 – 2007 starting from 40% of GDP in 1995 and reaching about 10% of GDP in 2007. The paper also analyses relations between shadow economy, state budget and tax system. Measures for these relations are discussed and a Vector Autoregressive model is estimated. Impulse Reaction Functions are drawn, showing that an increase in indirect tax burden enlarges shadow economy. A contrary effect arises due to an increase in a) direct tax burden, b) budget balance.
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| Length: | 23 pages |
| Date of creation: | 2008 |
| Handle: | RePEc:war:wpaper:2008-05 |
| Contact details of provider: | Postal: ul. Dluga 44/50, 00-241 Warszawa Phone: (+48 22) 55 49 144 Fax: (+48 22) 831 28 46 Web page: http://www.wne.uw.edu.pl/ Email: More information through EDIRC
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References listed on IDEAS
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William Davidson Institute Working Papers Series
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- Isilda Shima, 2005. "The Shadow Economy in NorwayDemand for Currency Approach," The IUP Journal of Monetary Economics, IUP Publications, vol. 0(1), pages 61-78, February.
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- Phillip Cagan, 1958. "The Demand for Currency Relative to the Total Money Supply," Journal of Political Economy, University of Chicago Press, vol. 66, pages 303-303. Full references (including those not matched with items on IDEAS)
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