The Application of Artificial Neural Network Method to Investigate the Effect of Unemployment on Tax Evasion

Although tax is an important component of government revenue which is used to finance government expenditures, there are many causes that lead people to avoid or evade from paying tax. Among the causes of tax evasion, main factors of them are low income of taxpayers, high tax burdens; increase the size of government, trade openness, high inflation and unemployment. This study postulates that unemployment has a high effect on tax evasion. The present study applied the Sensivity Analysis with Artificial Neural Network (ANN) methodology to investigate the effect of unemployment on tax evasion and also to determine the relative importance of unemployment among other causes of tax evasion for Malaysian data from 1963-2012. Results reveal that there is a positive relationship between unemployment and the extent of tax evasion and unemployment has a high effect on tax evasion among other causes of tax evasion

Causes of tax evasion and their relative contribution in Malaysia: an artificial neural network method analysis

Tax is one means of financing government expenditures and plays an important role in increasing government revenue. The amount of tax collected actually depends on the effectiveness of the tax system in an economy. When a taxation system is ineffective, many people will exploit the situation to avoid paying tax and tax evasion will become popular. In the presence of tax evasion, the government cannot allocate revenue for programs or provide desirable social services. Realizing the significant impact of tax evasion on the economy, the present study aims to determine the main factors that result in tax evasion and their relative importance. The present study employs an artificial neural network (ANN) methodology on Malaysian data for the period between 1963 and 2011. The results show that tax burden, size of the government and inflation rate have positive effects on tax evasion. The income of taxpayers and trade openness, however, has negative effects on tax evasion. The results also reveal that the income of the taxpayer has a more significant relationship with levels of tax evasion than the other causes of tax evasion examined in the present study

Early Warning Systems for banking crises: political and economic stability

Early Warning System (EWS) is a system that tries to predict the probability of crises using environmental factors. This study seeks to develop an EWS for the probability of systemic banking crises in East Asian countries by using a logit model taking into account a wide range of political and economic factors. Results reveal that short-term debt and exchange rate depreciation may trigger speculative attacks during political instability, economic slowdown, and inefficient regulatory environments. Policymakers and regulators may be able to prevent crises by stabilizing political and economic conditions. Furthermore, results indicate that government instability, corruption, high short-term debt, unstable monetary and fiscal policies do not only reduce investors’ confidence but also prevent effective crisis prevention strategies. Therefore, by adopting the EWS the government would be able to monitor environmental changes causing crises

Trade Deficit in Iran’s Economy: Public or Private Sector?

The main purpose of this paper is to analys the short and long run relationship between budget deficit and trade deficit, import and export, and Government revenues and expenditures. Also sustainability condition of trade deficit and budget deficit is examined. For doing so, we apply the time series econometrics techniques. The results show that to over come the budget deficit and trade deficit, the Government should, in the short run, decline budget deficit. In order to do this, we recommended that it has to decrease the taxes and increase the domestic deposits. We could not find any cointegration relationship between government revenues and expenditures, export and imports, and two deficits