Template-Type: ReDIF-Paper 1.0
Title: Dynamic Tax Evasion and Growth With Heterogeneous Agents
Author-Name: Francesco Menoncin
Author-Email: francesco.menoncin@unibs.it
Author-Name: Andrea Modena
Author-Email: andrea.modena@uni-mannheim.de
Classification-JEL: E20, G11, H26
Keywords: Dynamic tax evasion; general equilibrium; growth; heterogeneous agents

Abstract: We develop a tractable model of a production economy in which public capital improves
aggregate productivity and the taxpayers have heterogeneous evasion opportunities.
We show that, by issuing bonds, compliant taxpayers supply the evaders with an
instrument to hedge against auditing risks, thereby expanding their evasion capacity.
Moreover, we demonstrate that a higher share of tax evaders reduces the economy’s
total factor productivity but has a hump-shaped relationship with the growth rate of
aggregate capital.

Note: 
Length: 12
Creation-Date: 2023-02
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp393
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2023_393