Tax evasion and financial repression: A reconsideration using endogenous growth models
Rangan Gupta () and
No 81, Working Papers from Economic Research Southern Africa
Using two dynamic monetary general equilibrium models characterized by endogenous growth, financial repression and endogenously determined tax evasion, we analyze whether financial repression can be explained by tax evasion. When calibrated to four Southern European economies, we show that higher degrees of tax evasion within a country, resulting from a higher level of corruption and a lower penalty rate, yields higher degrees of financial repression as a social optimum. However, a higher degree of tax evasion, due to a lower tax rate, reduces the severity of the financial restriction. In addition, we find the results to be robust across growth models with or without productive public expenditures. The only difference being that the policy parameters in the former case have higher optimal values.
Keywords: Underground Economy; Tax Evasion; Macroeconomic Policy (search for similar items in EconPapers)
JEL-codes: E26 E63 (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)
Journal Article: Tax evasion and financial repression: a reconsideration using endogenous growth models (2009)
Working Paper: Tax Evasion and Financial Repression: A Reconsideration Using Endogenous Growth Models (2008)
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:rza:wpaper:81
Access Statistics for this paper
More papers in Working Papers from Economic Research Southern Africa Contact information at EDIRC.
Bibliographic data for series maintained by Dane Rossenrode ().