Tax Evasion and Financial Repression

Rangan Gupta

No 2005-34, Working papers from University of Connecticut, Department of Economics

Abstract: Using a simple overlapping generations framework, calibrated to four Southern European countries, we analyze the relationship between tax evasion, determined endogenously, and financial repression. We show that higher degree of tax evasion within a country, resulting from a higher level of corruption and a lower penalty rate, yields higher degrees of financial repression as a social optimum. However, a higher degree of tax evasion, due to a lower tax rate, reduces the severity of financial restriction.

Keywords: Underground Economy; Tax evasion; Macroeconomic Policy. (search for similar items in EconPapers)
JEL-codes: E26 E63 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2005-07, Revised 2007-06
New Economics Papers: this item is included in nep-dge, nep-mac and nep-pbe
Note: This paper previously circulated under the title "Policy Response of Endogenous Tax Evasion"
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://media.economics.uconn.edu/working/2005-34.pdf Full text (original version) (application/pdf)

Related works:
Journal Article: Tax evasion and financial repression (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:uct:uconnp:2005-34

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