Fiscal Policy under Indeterminacy and Tax Evasion

Aarhus University Economics Paper No. 2005-09

25 Pages Posted: 18 Jun 2008

See all articles by Francesco Busato

Francesco Busato

Aarhus University - School of Business and Social Sciences

Bruno Chiarini

University of Naples, Parthenope

Enrico Marchetti

University of Naples Parthenope - Italy

Date Written: May 30, 2005

Abstract

This paper shows under indeterminacy and tax evasion, an increase in corporate, labor or income tax rates pushes the economy into an expansionary pattern. These effects are reversed when the steady state is saddle-path stable.

Keywords: Dynamic General Equilibrium Models, Fiscal Policy, Tax Evasion and Underground Activities, Indeterminacy and Sunspots

JEL Classification: E32, E13, E26, O40

Suggested Citation

Busato, Francesco and Chiarini, Bruno and Marchetti, Enrico, Fiscal Policy under Indeterminacy and Tax Evasion (May 30, 2005). Aarhus University Economics Paper No. 2005-09, Available at SSRN: https://ssrn.com/abstract=1147604 or http://dx.doi.org/10.2139/ssrn.1147604

Francesco Busato (Contact Author)

Aarhus University - School of Business and Social Sciences ( email )

Building 350
DK-8000 Aarhus C
Denmark
+45 8942 1133 (Phone)
+45 8613 6334 (Fax)

HOME PAGE: http://www.econ.au.dk/afn

Bruno Chiarini

University of Naples, Parthenope ( email )

Via Generale Parisi 13
Napoli, 80133
Italy

Enrico Marchetti

University of Naples Parthenope - Italy ( email )

VIA MEDINA, 40 - SC. B - IIII PIANO
Via Generale Parisi, 13
NAPLES, 80133
Italy

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