This study develops a dynamic general equilibrium model, applied to Pakistani data, in which optimizing agents evade taxes by operating in the underground economy. The cost to firms of evading taxes is that they find themselves subject to credit rationing from banks. Our model simulations show...

Civil service has been at the top of the reform agenda for many years, surprisingly with very little progress. In the past, as well as recently, some actions have been taken which can be passed off as civil service reform. But the expected performance of the civil service, most appropriately...