A quantitative analysis of inflation as a tax on the underground economy

• 成果类型: Article
• 署名作者: Koreshkova, Tatyana A.
• 署名单位: Concordia University - Canada; University of Toronto; University System of Ohio; Oberlin College
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2005.02.009
• 发表日期: 2006
• 页码: 773-796
• 关键词: inflation; optimal taxation; underground economy

摘要

Inflation rates Lire more dispersed and are persistently higher in developing countries. This paper quantifies the importance of the public-finance motive for inflation in the presence of a tax-evading sector, the underground economy. The approach is motivated by the observation that the underground economy is especially large in poor countries. The analysis builds on a general equilibrium monetary model with two production sectors. where income in one of the sectors cannot be taxed. A benevolent government finances its budget using an optimal combination of the income tax rate and the inflation rate. The model is first calibrated to the U.S. economy and is then used for a cross-country simulation. The resulting relationships between the size of an underground economy, inflation rate, income tax rate and the share of seigniorage in the government revenue rationalize the cross-country data quantitatively well. (c) 2006 Published by Elsevier B.V.