Robust determinants of the shadow economy

Zhanabekov, Sarsen

doi:10.1111/boer.12330

Cited by 23 publications

(12 citation statements)

References 59 publications

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“…Unemployment may force individuals to seek alternative sources of income. Previous studies (Khan and Rehman, 2022;Zhanabekov, 2022) confirm positive impact of unemployment on the underground sector.…”

Section: Methodology and Datamentioning

confidence: 67%

“…Understanding the drivers of the underground economy is an important issue to implement effective economic policies. Institutional quality, tax and social security burden, and regulations have been identified as the potential determinants of the underground economy (Schneider et al ., 2010; Ajide, 2021; Zhanabekov, 2022). Nevertheless, this topic has been the subject of continuous discussion due to the critical role of the underground economy in policy implications (Elgin and Erturk, 2019).…”

Section: Introductionmentioning

confidence: 99%

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The role of budget imbalance in public spending–underground economy nexus: evidence from OECD countries

Pham

2023

IJSE

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PurposeThe purpose of this study is to analyze the relationship between public spending, budget imbalance and underground economy. In addition, this paper investigates how budget imbalance moderates the public spending–underground nexus.Design/methodology/approachBy utilizing a data set spanning from 1995 to 2017 of 35 OECD countries, the study has employed Dynamic Common Correlated Effects (DCCE) approach. The study is also extended to consider the marginal effects of public spending on the underground economy at different degrees of budget imbalance.FindingsThe results indicate that an increase in public spending and budget imbalance contributes to the expansion of underground economy. Interestingly, the effects of public spending on the underground economy will enhance and intensify with a higher budget imbalance level. The results are robust to various specifications and their broader implications are discussed.Practical implicationsGovernments should carefully implement a fiscal policy with a clear understanding that increasing public spending leads to the expansion of informality. Besides, policymakers should enforce supportive policies to boost economic growth, cooperation and cross-border trade to control the size of the underground economy.Originality/valueThis study stresses the role of public spending, budget imbalance on the underground economy in OECD nations. To the best of the author's knowledge, this study pioneers to explore the moderating effect of budget imbalance in the public spending–undergrround nexus.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-09-2022-0645.

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Section: Methodology and Datamentioning

confidence: 67%

Section: Introductionmentioning

confidence: 99%

The role of budget imbalance in public spending–underground economy nexus: evidence from OECD countries

Pham

2023

IJSE

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“…The effects of economic growth on informal economy are enigmatic (Zhanabekov, 2022). The dualist theory claims that economic growth hinders informal economy because this theory considers the informal economy as a residual of the formal economy (La Porta and Shleifer, 2014).…”

Section: Model and Datamentioning

confidence: 99%

“…The drivers of informality are multifaceted. They vary from unemployment to excessive tax burdens, to lack of economic development, to inefficient legal systems and to the quality of institutions (Wu and Schneider, 2019;Zhanabekov, 2022). However, this issue has been a continuous debate due to the evolution of socioeconomic structures.…”

Section: Introductionmentioning

confidence: 99%

Impacts of national intellectual capital on informal economy: the moderating role of institutional quality

Pham

2023

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Purpose The studies that explore the impacts of national intellectual capital on informal economy are scant. Moreover, the effect of an external factor such as institutional quality that moderates this relationship has largely been neglected in previous studies. Institutions are considered important pillars to accumulate national intellectual capital and reduce shadow economy. As such, this paper aims to investigate how institutional quality moderates the effects of national intellectual capital on informal economy in 17 Asian countries from 2000 to 2018. Design/methodology/approach This paper uses the generalized method of moments techniques, which allow cross-sectional dependence and slope homogeneity in panel data, to examine the moderating role of institutional quality on the relationship between national intellectual capital and informal economy. Various tests are conducted to ensure the robustness of the findings. Findings Empirical findings from this paper indicate that an increase in national intellectual capital and institutional quality declines the informal economy. Interestingly, better institutional quality aggravates the negative effects of national intellectual capital on reducing the size of informal economy. The author also finds that enhancing international trade and economic growth results in a decrease in the informal economy in Asian countries. Practical implications Empirical findings offer policymakers an indication of the relationships between national intellectual capital, institutional quality and informal economy, pointing out that national intellectual capital and institutional quality should be strengthened to allow Asian countries to limit the informal economy. Originality/value This study provides a conceptual model through which the moderating role of institutional quality on the national intellectual capital–informal economy nexus can be recognized. This approach has thus far not been investigated in the existing literature. To the best of the author’s knowledge, this study makes an original contribution to the empirical of national intellectual capital and informal economy nexus and produces new insights into the fields of the moderating effects of institutional quality on this nexus.

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“…In a knowledge economy, the universal use of intangible payments in transactions after legislative regulation may have a peer-to-peer social influence effect (van der Cruijsen & Knoben, 2021). A fiscal policy informed by knowledge management that digitizes financial transactions reduces the shadow economy (Zhanabekov, 2022) and has a positive impact on tax revenues.…”

Section: E-payment Behavior and Shadow Economymentioning

confidence: 99%

A Fiscal Policy Foresight Tax Model, Shadow Economy Reduction, and E-Payment Institutionalization as a Result of Knowledge Management

Varotsis¹

2022

TEL

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Foresight is the key for the economy, the business environment, and by extension society and politics to face various risks under conditions of uncertainty, which is becoming the norm as we progress through the 21st century. This paper proposes a wealth-based income tax model with an obligatory electronic transaction legal framework to advance fiscal knowledge management in Greek government. The research was conducted using an online questionnaire that was distributed to Greek tax payers via the snowball method. Linear regression was used to examine the associations between the variables. The research results provide insight into the factors driving the enhancement of tax revenue collection via artificial intelligence software after the widespread adoption of e-transactions. A fiscal tax e-payment reform policy based on an artificially intelligent tax foresight model succeeds in reducing income disparities caused by overtaxing honest taxpayers, thereby shrinking the shadow economy. With the widespread adoption of e-payments and complete digitization of financial transactions, the results of this study can serve as a foundation for the advancement of fiscal knowledge management and compliance with tax behavior. This study emphasizes the importance of planning ahead for taxes and coordinating information in order to reform fiscal policy for the better.

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Robust determinants of the shadow economy

Cited by 23 publications

References 59 publications

The role of budget imbalance in public spending–underground economy nexus: evidence from OECD countries

The role of budget imbalance in public spending–underground economy nexus: evidence from OECD countries

Impacts of national intellectual capital on informal economy: the moderating role of institutional quality

A Fiscal Policy Foresight Tax Model, Shadow Economy Reduction, and E-Payment Institutionalization as a Result of Knowledge Management

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