THE STUDY OF CAPITAL DECLINE ON THE NUMBER OF SUCCESSIVE TRANSACTIONS IN THE REAL ECONOMY

Yiannis Contoyiannis (), Michael Hanias () and Lykourgos Magafas ()
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Yiannis Contoyiannis: Department of Electronics University of West Attica, Athens, Greece
Michael Hanias: Department of Electrical Engineering, Eastern Macedonia and Thrace Institute of Technology
Lykourgos Magafas: Department of Electrical Engineering, Eastern Macedonia and Thrace Institute of Technology

Yearbook of the Faculty of Economics and Business Administration, Sofia University, 2019, vol. 17, issue 1, 141-147

Abstract: In the present work we study the decreasing of a capital value with the number of successive transactions in the real economy. More specifically, we apply a modified method in order to calculate the decline of a capital due to the fact of VAT (Value Added Tax). For a constant VAT we simulate the time dependence of a principal capital. In our simulation we consider that if the transaction remain below a threshold then it is legitimate (i.e VAT is paid) otherwise VAT is not paid as happens in underground economy. From the simulation results it has been found that the decay constant is independent on the initial capital. Also the dependence of decay constant on VAT is a linear one. These results leading to a universal exponential law similar with many physical phenomena. This exponential law connects the decay constant with VAT and the development of capital transactions with VAT.

Keywords: VAT; Power law; Monte Carlo. (search for similar items in EconPapers)
Date: 2019
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