Decomposing the Grey Economy in Bulgaria: A General-Equilibrium
Decomposing the Grey Economy in Bulgaria: A General-Equilibrium
Author(s): Aleksandar VasilevSubject(s): Economy, National Economy, Business Ethics
Published by: Софийски университет »Св. Климент Охридски«
Keywords: tax evasion; general equilibrium; Bulgaria
Summary/Abstract: This paper attempts to assess the size of the grey economy, and provide a decomposition by evasion type. The modelling approach utilizes a standard micro-founded general-equilibrium setup, which is augmented with a revenue-extraction mechanism and a government sector. The model is calibrated to Bulgaria after the introduction of the currency board (1999-2018). A computational experiment performed within this setup estimates that on average, the size of total evasion is a bit more than one-fourth of output, an estimate which is in line with the figures provided in both Philip (2014) and the European Commission (2014). Two-thirds of the model-predicted evasion is a combined result of income- and social security evasion, while the rest is due to VAT evasion.
Journal: Bulgarian Economic Papers
- Issue Year: 2022
- Issue No: 6
- Page Range: 2-21
- Page Count: 20
- Language: English