Shadow Economy, Tax Policies, Institutional Weakness and Financial Stability in Selected Oecd Countries
Claudiu Albulescu (),
Matei Tamasila and
Additional contact information
Matei Tamasila: Politehnica University of Timisoara, Romania
Ilie Taucean: Politehnica University of Timisoara, Romania
We investigate the effect of taxation, corruption and financial stability on the shadow economy in 23 OECD countries. For this purpose, we use a panel framework and a difference-in-difference system- GMM model over the period 2001 to 2013. While the taxation effects are assessed through the corporate income tax and the average tax wedge, the banking sector Z-score computed based on four different models represents our proxy for the financial system stability. Our results show that only the average tax wedge by family has a positive influence on the shadow economy dynamics, whereas the effect of corporate income tax proves insignificant. Further, our findings indicate a negative influence of the financial stability on the shadow economy, but the significant effect depends on how the Z-score is calculated. Finally, the corruption perception positively impacts the shadow economy dynamics. All in all, our outcomes support the idea that excessive tax burden, financial instability and institutional weaknesses range amongst the factors influencing the shadow economy.
Keywords: shadow economy; tax policies; financial stability; Z-score; GMM model; OECD countries (search for similar items in EconPapers)
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
http://www.toknowpress.net/ISBN/978-961-6914-16-1/papers/ML16-111.pdf full text (application/pdf)
http://www.toknowpress.net/ISBN/978-961-6914-16-1/MakeLearn2016.pdf Conference Programme (application/pdf)
Journal Article: Shadow economy, tax policies, institutional weakness and financial stability in selected OECD countries (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:tkp:mklp16:583-589
Access Statistics for this chapter
More chapters in Managing Innovation and Diversity in Knowledge Society Through Turbulent Time: Proceedings of the MakeLearn and TIIM Joint International Conference 2016 from ToKnowPress
Bibliographic data for series maintained by Alen Jezovnik ().