Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/185367
Authors: 
Chiarini, Bruno
Ferrara, Maria
Marzano, Elisabetta
Year of Publication: 
2018
Series/Report no.: 
CESifo Working Paper No. 7169
Abstract: 
This paper examines the role of tax evasion in explaining the business cycle in a DSGE model with a financial accelerator. For this purpose, we assume that financially constrained agents are tax evaders, taking advantage of an additional margin of flexibility in coping with adverse shocks. In this setting, we simulate a risk shock that propagates its effects in the credit channel via the financial accelerator mechanism. The results show that tax evasion is pro cyclical and strengthens the effects of the financial accelerator. Unlike the standard literature, in which tax evasion cushions business cycle fluctuations, here we find that it amplifies macroeconomic fluctuations considerably.
Subjects: 
tax evasion
financial accelerator
business cycle
risk shocks
DSGE modeling
JEL: 
E32
E44
H26
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.