Fiscal Policy under Indeterminacy and Tax Evasion

Francesco Busato (), Bruno Chiarini () and Enrico Marchetti ()

Economics Working Papers from School of Economics and Management, University of Aarhus

Abstract: This paper shows under indeterminacy and tax evasion, an increase in corporate, labor or income tax rates pushes the economy into an expansionary pattern. These effects are reversed when the steady state is saddle-path stable.

Keywords: Dynamic General Equilibrium Models; Fiscal Policy; Tax Evasion (search for similar items in EconPapers)
JEL-codes: E32 E13 E26 O40 (search for similar items in EconPapers)
Date: 2005-05-30
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