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Sweden'S Laffer Curve: Taxation And The Unobserved Economy

Author

Listed:
  • Edgar L. Feige

    (University of Wisconsin-Madison)

  • Robert T. McGee

    (Florida State University)

Abstract

Recent research on the unobserved economy suggests that the phenomenon has important implications for both macroeconomic policy and public finance. Attention is focused on the public finance implications by developing a simple macro model from which it is possible to derive a Laffer curve. The model reveals that the shape and position of the Laffer curve depend upon the strength of supply side effects, the progressivity of the tax system and the size of the unobserved economy. Using alternative parameterizations of each of these effects, it is possible to obtain rough empirical estimates of the Laffer curve for Sweden.

Suggested Citation

  • Edgar L. Feige & Robert T. McGee, 2005. "Sweden'S Laffer Curve: Taxation And The Unobserved Economy," Macroeconomics 0501023, EconWPA.
  • Handle: RePEc:wpa:wuwpma:0501023 Note: Type of Document - pdf; pages: 21
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    References listed on IDEAS

    as
    1. Boskin, Michael J, 1978. "Taxation, Saving, and the Rate of Interest," Journal of Political Economy, University of Chicago Press, vol. 86(2), pages 3-27, April.
    2. Michael J. Boskin, 1978. "Taxation, Saving, and the Rate of Interest," NBER Chapters,in: Research in Taxation, pages 3-27 National Bureau of Economic Research, Inc.
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    Cited by:

    1. Hana Zídková, 2012. "Discussion of Methods for Estimating the Shadow Economy," Acta Oeconomica Pragensia, University of Economics, Prague, vol. 2012(6), pages 3-17.
    2. Francisca Guedes de Oliveira & Leonardo Costa, 2013. "The Vat Laffer Curve And The Business Cycle," Working Papers de Economia (Economics Working Papers) 02, Católica Porto Business School, Universidade Católica Portuguesa.
    3. Enrico Colombatto, 2012. "Fiscal Harmonization: Credible Goal or Trojan Horse?," Working papers 010, Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
    4. Bruno Théret & Didier Uri, 1988. "La courbe de Laffer dix ans après : un essai de bilan critique," Revue Économique, Programme National Persée, vol. 39(4), pages 753-808.
    5. Feige, Edgar L., 1986. "Sweden’s 'Underground Economy'," Working Paper Series 161, Research Institute of Industrial Economics.
    6. repec:rss:jnljfe:v4i1p6 is not listed on IDEAS
    7. F Guedes de Oliveira & L Costa, 2015. "The VAT Laffer Curve and the Business Cycle in the EU27: An Empirical Approach," Economic Issues Journal Articles, Economic Issues, vol. 20(2), pages 29-43, September.
    8. Emilio Albi Ibáñez, 1988. "Elusión y evasión fiscales (La investigación económica)," Documentos de trabajo de la Facultad de Ciencias Económicas y Empresariales 88-27, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales.
    9. Jacob Lundberg, 2017. "The Laffer curve for high incomes," LIS Working papers 711, LIS Cross-National Data Center in Luxembourg.
    10. Bayindir-Upmann, Thorsten & Raith, Matthias G., 2003. "Should high-tax countries pursue revenue-neutral ecological tax reforms?," European Economic Review, Elsevier, vol. 47(1), pages 41-60, February.
    11. Stanisław Cichocki & Ryszard Kokoszczyński, 2016. "The evolution of the Laffer curve as a framework for studying tax evasion: from simple theoretical to DSGE models," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 45.
    12. Jan Hanousek & Filip Palda, 2002. "The Evolution of Tax Evasion in the Czech Republic: A Markov Chain Analysis," Public Economics 0205002, EconWPA.
    13. Gogas, Periklis, 1997. "On the construction of cersonal, corporate and effective overall marginal tax rates for Canada (1977-1992)," MPRA Paper 1465, University Library of Munich, Germany.
    14. Dan Usher, 2014. "How High Might the Revenue-maximizing Tax Rate Be?," Working Papers 1334, Queen's University, Department of Economics.
    15. Hugo Miguel de Oliveira Cruz Pinto de Abreu & Elísio Fernando Moreira Brandão & Samuel Cruz Alves Pereira, 2014. "Crossing Mountains: The Effect of Competition on the Laffer Curve," FEP Working Papers 523, Universidade do Porto, Faculdade de Economia do Porto.
    16. David R. Henderson, 1989. "Are We All Supply-Siders Now?," Contemporary Economic Policy, Western Economic Association International, vol. 7(4), pages 116-128, October.
    17. Şen, Hüseyin & Bulut-Çevik, Zeynep Burcu & Kaya, Ayşe, 2017. "The Khaldun-Laffer Curve Revisited: A Personal Income Tax-Based Analysis for Turkey," MPRA Paper 78850, University Library of Munich, Germany, revised 27 Apr 2017.

    More about this item

    Keywords

    Laffer curve; supply side; unobserved economy; underground economy; tax evasion; tax revenues;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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