The evolution of the Laffer curve as a framework for studying tax evasion: from simple theoretical to DSGE models

Stanisław Cichocki and Ryszard Kokoszczyński

Ekonomia journal, 2016, vol. 45

Abstract: Since about 40 years the Laffer curve is used to investigate tax evasion in different ways and with different results. In this paper we present, using a critical literature review, the main considerations related to the Laffer curve starting from historically oldest theoretical models and empirical studies, through direct empirical estimations of the Laffer curve to, widely used nowadays, general equilibrium models, in particular endogenous growth models. We show, by discussing the advantages and drawbacks of these approaches, their different usefulness in studying tax evasion. We conclude that currently endogenous growth models, particularly DSGE models, provide an appropriate approach for the analysis of tax evasion using the Laffer curve.

Keywords: Laffer curve; tax evasion; tax income; shadow economy (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:eko:ekoeko:45_7

DOI: 10.17451/eko/45/2016/200

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