The Parallel Economy in Malawi: Size, Effect on Tax Revenue and Policy Options

Chiza Chiumya ()

MPRA Paper from University Library of Munich, Germany

Abstract: This study looks at the dynamics of the Parallel Economy. I estimate the size of the Parallel Economy in Malawi and its relationship with Tax Revenues. The Parallel Economy in Malawi was 12.3%, 23.1% and 17.3% of GDP in the 1970s, 1980s, and 1990s respectively. Income Taxes were a major driver of the Parallel Economy as compared to Import and Consumption Taxes. An increase in Tax Revenue led to an increase in the Parallel Economy and a decrease in tax Revenue led to a decrease in the Parallel Economy.

Keywords: Parallel Economy; Official Economy; Tax Revenue (search for similar items in EconPapers)
JEL-codes: H2 (search for similar items in EconPapers)
Date: 2007-03-12
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:9860

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