EconPapers    
Economics at your fingertips  
 

Optimal Fiscal Policy in the Presence of VAT Evasion: The Case of Bulgaria

Aleksandar Vasilev

Czech Journal of Economics and Finance (Finance a uver), 2018, vol. 68, issue 4, 399-414

Abstract: This paper explores the effects of fiscal policy in the presence of a VAT evasion channel, and then compares and contrasts two regimes - the exogenous vs. optimal policy case. To this end, a dynamic general-equilibrium model, calibrated to Bulgarian data (1999-2014), is augmented with a government sector. The main findings from the computational experiments performed in the paper are: (i) The optimal steady-state income tax rate is zero; (ii) The benevolent Ramsey planner provides the optimal amount of the valuable public services, which are now three times lower; (iii) The size of the grey sector is twice lower; (iv) optimal steady-state consumption tax needed to finance the optimal level of government spending is twice lower, as compared to the exogenous policy case.

Keywords: consumption tax; income tax; VAT evasion; general equilibrium; fiscal policy; Bulgaria (search for similar items in EconPapers)
JEL-codes: D58 E26 H26 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://journal.fsv.cuni.cz/storage/1412_399-414_va ... issue_4_2018.doc.pdf (application/pdf)

Related works:
Journal Article: Optimal fiscal policy in the presence of VAT evasion: the case of Bulgaria (2018) Downloads
Working Paper: Optimal fiscal policy in the presence of VAT evasion: the case of Bulgaria (2016) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fau:fauart:v:68:y:2018:i:4:p:399-414

Access Statistics for this article

More articles in Czech Journal of Economics and Finance (Finance a uver) from Charles University Prague, Faculty of Social Sciences Contact information at EDIRC.
Bibliographic data for series maintained by Lenka Herrmannova ().

 
Page updated 2019-12-07
Handle: RePEc:fau:fauart:v:68:y:2018:i:4:p:399-414