Tax Adjustments and Informal Economy in the Czech Republic and Slovakia: A DSGE Approach

Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F00216224%3A14560%2F20%3A00116017" target="_blank" >RIV/00216224:14560/20:00116017 - isvavai.cz</a>
Result on the web
<a href="http://www.fhi.sk/files/katedry/kove/ssov/VKOXX/Zbornik2020.pdf" target="_blank" >http://www.fhi.sk/files/katedry/kove/ssov/VKOXX/Zbornik2020.pdf</a>
DOI - Digital Object Identifier
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Result language
angličtina
Original language name
Tax Adjustments and Informal Economy in the Czech Republic and Slovakia: A DSGE Approach
Original language description
The goal of this paper is to quantify and compare the impacts of alternative tax adjustments in the corporate tax rate on the size of the shadow economy and, consequently, on government tax revenues in Slovakia and the Czech Republic. In this contribution, we present results based on a small dynamic stochastic general equilibrium (DSGE) model consisting of both formal and informal sectors of an economy. We estimate this DSGE model in linearized form for both Slovak and Czech economies, using the quarterly data for household consumption, investments, total gross wages, probability of tax audit, and several measures for government revenues. Based on the estimated parameter values, we perform a set of simulations using the non-linear form of the underlying DSGE model to evaluate the differences in effects of changes in the corporate tax rate on the two economies of interest. These effects are evaluated with regards to the changes in steady-state values of the output in the official economy, total tax revenues, and the size of the shadow economy. The corresponding Laffer curves help us to analyze the reaction of the informal economy in response to changes in the corporate tax rates, and subsequent effects on the size of the government tax revenues.
Czech name
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Czech description
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Publication year
2020
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Article name in the collection
Quantitative Methods in Economics; Multiple Criteria Decision Making XX
ISBN
9788089962600
ISSN
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e-ISSN
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Number of pages
8
Pages from-to
119-126
Publisher name
University of Economics, Bratislava
Place of publication
Bratislava
Event location
Púchov, Slovakia
Event date
May 27, 2020
Type of event by nationality
EUR - Evropská akce
UT code for WoS article
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