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Tax Evasion, Tax Monitoring Expenses and Economic Growth: An Empirical Analysis in OECD Countries

Author

Listed:
  • Konstantinos Chatzimichael
  • Pantelis Kalaitzidakis

    (Department of Economics, University of Crete, Greece)

  • Vangelis Tzouvelekas

    (Department of Economics, University of Crete, Greece)

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.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Konstantinos Chatzimichael & Pantelis Kalaitzidakis & Vangelis Tzouvelekas, 2013. "Tax Evasion, Tax Monitoring Expenses and Economic Growth: An Empirical Analysis in OECD Countries," Working Papers 1308, University of Crete, Department of Economics.
    • Handle: RePEc:crt:wpaper:1308
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    References listed on IDEAS

    as
    1. Konstantinos Chatzimichael & Vangelis Tzouvelekas, 2014. "Human capital contributions to explain productivity differences," Journal of Productivity Analysis, Springer, vol. 41(3), pages 399-417, June.
    2. Sifis Kafkalas & Pantelis Kalaitzidakis & Vangelis Tzouvelekas, 2012. "Tax Evasion and Public Expenditures on Tax Collection Services in an Endogenous Growth Model," Working Papers 1202, University of Crete, Department of Economics.
    3. Roubini, Nouriel & Sala-i-Martin, Xavier, 1995. "A growth model of inflation, tax evasion, and financial repression," Journal of Monetary Economics, Elsevier, vol. 35(2), pages 275-301, April.
    4. Slemrod, Joel & Yitzhaki, Shlomo, 2002. "Tax avoidance, evasion, and administration," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 22, pages 1423-1470, Elsevier.
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    16. Kafkalas, Sifis & Kalaitzidakis, Pantelis & Tzouvelekas, Vangelis, 2014. "Tax evasion and public expenditures on tax revenue services in an endogenous growth model," European Economic Review, Elsevier, vol. 70(C), pages 438-453.
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    Cited by:

    1. 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.
    2. 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).

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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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