Decomposing the Grey Economy in Bulgaria: A General-Equilibrium Analysis

Aleksandar Vasilev

EconStor Open Access Articles and Book Chapters, 2022, vol. 8, issue 2, 7-23

Abstract: This paper attempts to assess the size of the grey economy, and provide a decomposition by evasion type. The modelling approach utilizes a standard micro- founded general-equilibrium setup, which is augmented with a revenue-extraction mechanism and a government sector. The model is calibrated to Bulgaria after the introduction of the currency board (1999-2018). A computational experiment performed within this setup estimates that on average, the size of total evasion is a bit more than one-fourth of output, an estimate which is in line with the figures provided in both Philip (2014) and the European Commission (2014). Two-thirds of the model- predicted evasion is a combined result of income- and social security evasion, while the rest is due to VAT evasion.

Keywords: tax evasion; general equilibrium (search for similar items in EconPapers)
JEL-codes: D58 (search for similar items in EconPapers)
Date: 2022
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https://www.econstor.eu/bitstream/10419/268778/1/grey_economy_BG_2022.pdf (application/pdf)

Related works:
Working Paper: Decomposing the Grey Economy in Bulgaria - A General-Equilibrium Analysis (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:espost:268778

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