Corruption, Tax Revenue and Growth: A Non Linear Relationship?

Raffaella Coppier ()
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Raffaella Coppier: Università di Macerata

Rivista di Politica Economica, 2006, vol. 96, issue 3, 243-278

Abstract: In this paper we explore tax revenue in a regime of widespread corruption in a static and dynamic framework. We prove that the relationship between tax rate and tax collection is not linear. In astatic context, this may bring about a Laffer-like behavior of overall tax revenue. A higher tax rate, via higher corruption, may reduce revenues. In a dynamic context, this relationship is inverted: tax revenues are high for low and high tax rates, while low for intermediate tax rates. Furthermore we prove that the relationship between the tax rate and growth is not linear.

JEL-codes: D73 H21 H26 (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:rpo:ripoec:v:96:y:2006:i:3:p:243-278

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