Taxes, Prisons, and CFOs: The Effects of Increased Punishment on Corporate Tax Compliance in Ecuador

This paper takes advantage of a rich firm level data set from Ecuador to analyze the effects of a reform in 2007 that introduced imprisonment for tax evasion and made a firm’s CFO liable for tax-crimes. Our dataset contains actual tax-return and financial-statement information for the universe of corporations in Ecuador from 2003 to 2007. We study the effects of higher punishment both at the intensive and extensive margins. We combine a difference-in-difference-in-difference approach with the DiNardo, Fortin and Lemieux decomposition method. This allows us to estimate the heterogeneous effects of the reform across the distribution of firms. We find that, at the intensive margin the reform led to an average 10% increase in real corporate tax payments. However, positive effects are only found at the right tail of the tax distribution (above the 75th percentile). At the extensive margin, the probability of entry into the tax-net increased, but most of the firms that entered the tax net claimed zero taxes.Tax evasion, corporate tax compliance, tax reform, developing country, punishment, Ecuador

Mathematical modeling of tax evasion: a case study for Greece

Πτυχιακή εργασία--Πανεπιστήμιο Μακεδονίας, Θεσσαλονίκη, 2019.The aim of this thesis is to study how taxpayers decide to evade part of their income under certain constraints specific to the nature of their occupation. We further develop a model on taxpayer's compliance decision based on the Standard Model of Yitzhaki by introducing a threshold defined as the fraction of the actual income that is declared. We also make computations to examine taxpayer's response to changes in policy parameters such as the tax penalty coefficient, the tax rate and the probability of tax audits to take place, with respect to the income they decide to hide. We find that taxpayers are motivated to declare a higher portion of their income when policy makers increase the tax penalty coefficient and arrange some more frequent tax audits

The analysis of taxpayers behaviour and the shadow economy: theoretical approach and empirical evidence for European countries

In the last decades, the consequences of tax evasion and shadow economy have been evident, indeed the wealth is hidden in the black market and it is translated into missed revenues for central government. Sometimes, the new type of approach is necessary to understand different phenomena and the reduction to single equation or formula is not sufficient to describe a single behaviour, of both consumer and producer. As the recent Nobel Prize taught, to achieve a satisfying analysis, we need to approach to new experimental method, based on the expectations of audit and on the interactions among agents, analysed through pure simulations. Taking at the same time two dierent views and combining them, we should offer a new possibility of interaction among quantitative and qualitative methods, underlying the importance of both in a complete and exhaustive analysis. This work, through some different chapters, attempts to debate the tax evasion and the underground economy in a wide perspective and from different points of view. The second chapter, regards a collection of surveys of both tax evasion and shadow economy, gathering dierent models, aspects and solutions to these problems. In this part we analyse the problem of tax evasion and the shadow economy through different methodological approach. Secondly, we focus on Agent-based Model we are going to use in the following part, looking deepen to interactions among agents and creation of network and inuences among them. Subsequently, analysing MIMIC model we will see the pros and cons of this model and how it investigates the problem of shadow economy in European countries. One of the most important problem about this topic is missing data because of underground economy's intrinsic nature is unobservable and we need some approximations to evaluate it. The third part concerns the Agent-based Model and its application with dierent instruments. From one hand, we use an analytical model derived from Hokamp and Pickhardt (2010), whereas from another hand we use a qualitative model developed by Lsd program of Valente (2008) to analyse the same problem from different points of view and capturing different aspects. The fourth chapter analyses the problem of shadow economy using a MIMIC Model developed by Dell'Anno (2007), compared to the Schneider (2015) estimation and evaluating the different results between two types of modelling

Illiquidity and All Its Friends.

The recent crisis was characterized by massive illiquidity. This paper reviews what we know and don't know about illiquidity and all its friends: market freezes, fire sales, contagion, and ultimately insolvencies and bailouts. It first explains why liquidity cannot easily be apprehended through a single statistics, and asks whether liquidity should be regulated given that a capital adequacy requirement is already in place. The paper then analyzes market breakdowns due to either adverse selection or shortages of financial muscle, and explains why such breakdowns are endogenous to balance sheet choices and to information acquisition. It then looks at what economics can contribute to the debate on systemic risk and its containment. Finally, the paper takes a macroeconomic perspective, discusses shortages of aggregate liquidity and analyses how market value accounting and capital adequacy should react to asset prices. It concludes with a topical form of liquidity provision, monetary bailouts and recapitalizations, and analyses optimal combinations thereof; it stresses the need for macroprudential policies.

Illiquidity and all its Friends

The recent crisis was characterized by massive illiquidity. This paper reviews what we know and don't know about illiquidity and all its friends: market freezes, fire sales, contagion, and ultimately insolvencies and bailouts. It first explains why liquidity cannot easily be apprehended through a single statistics, and asks whether liquidity should be regulated given that a capital adequacy requirement is already in place. The paper then analyzes market breakdowns due to either adverse selection or shortages of financial muscle, and explains why such breakdowns are endogenous to balance sheet choices and to information acquisition. It then looks at what economics can contribute to the debate on systemic risk and its containment. Finally, the paper takes a macroeconomic perspective, discusses shortages of aggregate liquidity and analyses how market value accounting and capital adequacy should react to asset prices. It concludes with a topical form of liquidity provision, monetary bailouts and recapitalizations, and analyses optimal combinations thereof; it stresses the need for macro-prudential policies.Liquidity, Contagion, Bailouts, Regulation

Illiquidity and All Its Friends

The recent crisis was characterized by massive illiquidity. This paper reviews what we know and don't know about illiquidity and all its friends: market freezes, fire sales, contagion, and ultimately insolvencies and bailouts. It first explains why liquidity cannot easily be apprehended through a single statistics, and asks whether liquidity should be regulated given that a capital adequacy requirement is already in place. The paper then analyzes market breakdowns due to either adverse selection or shortages of financial muscle, and explains why such breakdowns are endogenous to balance sheet choices and to information acquisition. It then looks at what economics can contribute to the debate on systemic risk and its containment. Finally, the paper takes a macroeconomic perspective, discusses shortages of aggregate liquidity and analyses how market value accounting and capital adequacy should react to asset prices. It concludes with a topical form of liquidity provision, monetary bailouts and recapitalizations, and analyses optimal combinations thereof; it stresses the need for macroprudential policies.

Strategies to Sustain Small-and-Medium Sized Business Enterprises

Eighty-five percent of all firms operating in Nigeria are small-and medium-sized business enterprises (SMEs) and contribute almost 55% to the gross domestic product (GDP) in Nigeria. Capital flight and other growth inhibitors pose threats to the sustainability of SMEs in Nigeria. This exploratory multiple-case study was to determine strategies SME leaders use to sustain business operations in Nigeria. The study participants consisted of 15 SME leaders from 3 regional manufacturing firms who had successfully implemented strategies to sustain SMEs in Nigeria. Bertalanffy\u27s general systems theory and Freeman\u27s stakeholder theory were the conceptual frameworks used in the research. The data collection processes included semistructured interviews and reviewing company documents. After analyzing the interview data and validating through member checking, 5 core themes emerged during the data analysis process: creating new markets, encouraging opportunity for sustainable growth, securing additional funding sources, employee participation in decision making, and gaining competitive advantages. The findings may promote social change among the business community leaders by identifying essential characteristics to improve the posterity of SMEs in Nigeria

Essays in Applied Economics: new empirical approaches to study individual behavior and improve policy targeting

This PhD thesis is composed of three, seemingly almost unrelated, chapters. The first chapter, titled “Twice Losers: How the shadow of cheating affects tax behavior and norms” relies on a lab experiment to study whether the way income is generated in a society can impact individuals’ willingness to pay taxes and judgements on the acceptability of tax evasion. I focus on whether the suspicion that some individuals in the society could have got their income by cheating at the expenses of others alters individuals’ behavior and acceptability ratings on tax evasion. The data collection for this project was made possible by a generous grant received by IFREE in 2018. The second chapter, titled “Machine learning in the service of policy targeting: The case of Public Credit Guarantees” originates from a joint work I developed with some colleagues at Bank of Italy, where I spent a few months as a research intern. This project relies on a combination of tools from Machine Learning and causal inference to propose an alternative targeting rule for Italy’s main public guarantee program, aimed to ease SMEs access to credit through publicly funded collaterals. The third and last chapter, titled “Social preferences and strategic incentives for cooperation in infinitely repeated Prisoner Dilemmas”, which I first started working on while visiting UCSB in 2019, bridges my interests for applied econometrics and experimental economics. This paper investigates the role of structural game parameters and of social preferences in shaping cooperation in infinitely repeated Prisoner Dilemmas: in the first part, I collect data from previous experiments to run a meta-analysis aimed to test, using simple supervised learning algorithms, the predictive power of structural game parameters. In the second part, I develop a novel experimental design to study the role of social preferences on cooperation in infinitely repeated Prisoner Dilemmas