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Tax evasion, tax monitoring expenses and economic growth: an empirical analysis in OECD countries

Author

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  • Konstantinos Chatzimichael

    (Cyprus University of Technology)

  • Pantelis Kalaitzidakis

    (University of Crete University Campus
    The Rimini Centre for Economic Analysis)

  • Vangelis Tzouvelekas

    (University of Crete University Campus)

Abstract

Using a standard endogenous growth model with public capital accumulation enriched with tax evasion (Roubini and Sala-i-Martin in J Monet Econ 35:275–301, 1995) developed by Kafkalas et al. (Eur Econ Rev 70:438–453, 2014), we provide empirical evidence on the relationship between aggregate output growth, announced tax rate and tax monitoring expenses for a set of 32 OECD countries during the 2000–2007 period. Our results indicate that high announced tax rates above the elasticity of public capital and excess expenses on tax auditing as means of reducing tax evasion are not effective deepening the recession.

Suggested Citation

  • Konstantinos Chatzimichael & Pantelis Kalaitzidakis & Vangelis Tzouvelekas, 2019. "Tax evasion, tax monitoring expenses and economic growth: an empirical analysis in OECD countries," Empirical Economics, Springer, vol. 57(1), pages 285-300, July.
    • Handle: RePEc:spr:empeco:v:57:y:2019:i:1:d:10.1007_s00181-018-1441-8
    DOI: 10.1007/s00181-018-1441-8
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    Cited by:

    1. Leonardo Barros Torres & Gilberto Tadeu Lima & Jaylson Jair da Silveira, 2024. "Endogenous Tax Compliance and Macroeconomic Performance Driven by Satisficing Evolutionary Dynamics," Working Papers, Department of Economics 2024_10, University of São Paulo (FEA-USP).
    2. Cebula, Richard J., 2020. "The Relative Tax Gap Hypothesis: An Exploratory Analysis and Application to U.S. Financial Markets," American Business Review, Pompea College of Business, University of New Haven, vol. 23(1), pages 35-52, May.

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    More about this item

    Keywords

    Statutory tax rate; Tax monitoring; Tax evasion; GDP growth;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures

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