Decomposing the Grey Economy in Bulgaria: A General-Equilibrium Analysis

  • Aleksander VASILEV Lincoln International Business School, UK

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 mech- anism and a government sector. The model is calibrated to Bulgaria after the intro- duction 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.




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Published
2022-12-31
How to Cite
VASILEV, Aleksander. Decomposing the Grey Economy in Bulgaria: A General-Equilibrium Analysis. Journal of Mathematical Economics and Finance, [S.l.], v. 8, n. 2, p. 7 - 23, dec. 2022. ISSN 2458-0813. Available at: <https://journals.aserspublishing.eu/jmef/article/view/7595>. Date accessed: 19 june 2024. doi: https://doi.org/10.14505/jmef.v8.2(15).01.