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Shadow economy and its relations with tax system and state budget in Poland 1995 - 2007

In this paper, results of the research on measurement of shadow economy in Poland in the period 1995 - 2007 are presented. This research is motivated by controversial existing estimates. First, some definitions of shadow economy are reviewed. Then, on the basis of monetary methods, an econometric mo... Full description

Year of Publication: 2008
Authors: Cichocki, Stanisław
Institutions: Wydział Nauk Ekonomicznych, Uniwersytet Warszawski
Physical Description: application/pdf
Series: Working Papers / Wydział Nauk Ekonomicznych, Uniwersytet Warszawski
Subjects: shadow economy | tax system | state budget | currency method | VAR
Classification: jel-O17; jel-H2; jel-H26
Type of Publication: Book / Working Paper
Notes: Number 2008-05 23 pages
Title record from database: RePEc - Research Papers in Economics
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Summary: In this paper, results of the research on measurement of shadow economy in Poland in the period 1995 - 2007 are presented. This research is motivated by controversial existing estimates. First, some definitions of shadow economy are reviewed. Then, on the basis of monetary methods, an econometric model for currency demand is built. Using estimation results, the size of shadow economy is assessed. According to these estimates shadow economy declined in the period 1995 – 2007 starting from 40% of GDP in 1995 and reaching about 10% of GDP in 2007. The paper also analyses relations between shadow economy, state budget and tax system. Measures for these relations are discussed and a Vector Autoregressive model is estimated. Impulse Reaction Functions are drawn, showing that an increase in indirect tax burden enlarges shadow economy. A contrary effect arises due to an increase in a) direct tax burden, b) budget balance.
Item Description: Number 2008-05 23 pages
Physical Description: application/pdf

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