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Volume 56, Issue 3 -4


Estimating the Evolution of Tax Evasion: A Markov Chain Analysis Applied to the Czech Republic (in Czech)

Hanousek, Jan; Palda, Filip

Year: 2006   Volume: 56   Issue: 3 -4   Pages: 127-151

Abstract: The paper demonstrates how survey methods and retrospective questions can be put to effective use in the study of shadow-economy dynamics; specifically, the evolution of tax evasion in the Czech Republic. The authors measure the average individual's transition between the shadow and official economy, and use these transition probabilities to predict the evolution of tax evasion with the help of tax-evasion surveys taken in 2000, 2002, and 2004. The authorsĀ“ results suggest that the shadow economy in the Czech Republic has flattened, and that a small decrease in the degree of evasion can be expected.

JEL classification: H26, H43, K42, O17

Keywords: informal economy; shadow economy; tax evasion; transition

RePEc: http://ideas.repec.org/a/fau/fauart/v56y2006i3-4p127-151.html

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