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The evolution of the Laffer curve as a framework for studying tax evasion: from simple theoretical to DSGE models

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  • Stanisław Cichocki
  • Ryszard Kokoszczyński

Abstract

Since about 40 years the Laffer curve is used to investigate tax evasion in different ways and with different results. In this paper we present, using a critical literature review, the main considerations related to the Laffer curve starting from historically oldest theoretical models and empirical studies, through direct empirical estimations of the Laffer curve to, widely used nowadays, general equilibrium models, in particular endogenous growth models. We show, by discussing the advantages and drawbacks of these approaches, their different usefulness in studying tax evasion. We conclude that currently endogenous growth models, particularly DSGE models, provide an appropriate approach for the analysis of tax evasion using the Laffer curve.

Suggested Citation

  • Stanisław Cichocki & Ryszard Kokoszczyński, 2016. "The evolution of the Laffer curve as a framework for studying tax evasion: from simple theoretical to DSGE models," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 45.
    • Handle: RePEc:eko:ekoeko:45_7
    DOI: 10.17451/eko/45/2016/200
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    References listed on IDEAS

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