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The shadow economy as an equilibrium outcome

Version 2 2024-06-13, 08:56
Version 1 2014-12-11, 12:11
journal contribution
posted on 2014-01-01, 00:00 authored by P Gomis-Porqueras, A Peralta-Alva, Christopher Waller
We construct a dynamic general equilibrium model of tax evasion where agents choose to report some of their income. Unreported income requires using a payment method that avoids recordkeeping in some markets-cash. Trade using cash to avoid taxes is the 'shadow economy' in our model. We then calibrate our model using money, interest rate and GDP data to back out the size of the shadow economy for a sample of countries and compare our measures to traditional reduced form estimates. © 2014 Elsevier B.V.

History

Journal

Journal of Economic Dynamics and Control

Volume

41

Pagination

1 - 19

Publisher

Elsevier

Location

Amsterdam, The Netherlands

ISSN

0165-1889

Language

eng

Publication classification

C Journal article; C1 Refereed article in a scholarly journal

Copyright notice

2014, Elsevier

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