Asymmetric Information, Tax Evasion and Alternative Instruments of Government Revenue

No 2005-33, Working papers from University of Connecticut, Department of Economics

Abstract: Using a pure-exchange overlapping generations model, characterized with tax evasion and information asymmetry between the government (the social planner) and the financial intermediaries, we try and seek for the optimal tax and seigniorage plans, derived from the welfare maximizing objective of the social planner. We show that irrespective of whether the economy is characterized by tax evasion, or asymmetric information, a benevolent social planner, maximizing welfare and simultaneously financing the budget constraint, should optimally rely on explicit rather than implicit taxation.

Keywords: Tax evasion; Information Asymmetry in Financial Markets (search for similar items in EconPapers)
JEL-codes: E26 E63 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2005-07
New Economics Papers: this item is included in nep-dge, nep-mac, nep-pbe and nep-pub
Note: This is a revised version of the fourth chapter of my dissertation at the University of Connecticut. I am particularly grateful to my advisors Christian Zimmermann and Dhammika Dharmapala for many helpful comments and discussions. All remaining errors are mine.
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Journal Article: Asymmetric Information, Tax Evasion and Alternative Instruments of Government Revenue (2006)
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