Tax evasion and financial repression

Journal of Economics and Business, 2008, vol. 60, issue 6, 517-535

Abstract: Using a simple overlapping generations framework, calibrated to four Southern European countries, we analyze the relationship between tax evasion, determined endogenously, and financial repression. We show that higher degree 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.

Keywords: Underground; economy; Tax; evasion; Macroeconomic; policy (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (18)

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Working Paper: Tax Evasion and Financial Repression (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jebusi:v:60:y:2008:i:6:p:517-535

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