Social and Behavioral Sciences | Open Access Articles

On The Treatment Of Income Tax Rates In Empirical Analysis Of Tax Evasion, Steven E. Crane, Farrokh Nourzad Aug 1987

On The Treatment Of Income Tax Rates In Empirical Analysis Of Tax Evasion, Steven E. Crane, Farrokh Nourzad

Economics Faculty Research and Publications

In this paper, it is argued that average tax rates exert an influence on income tax evasion separate from, and opposite to that of marginal tax rates. Failure to account for this effect in empirical evasion models biases the parameter estimate of the marginal rate in a predictable manner. Evidence from an aggregate empirical model of evasion in the US indicates that the marginal tax rate is positively related to evasion, whereas the average tax rate is negatively related. Further, exclusion of the average rate from the model does in fact bias the parameter estimate of the marginal tax rate.

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A Reexamination Of The Effect Of Rapid Military Spending On Inflation, Farrokh Nourzad Jul 1987

A Reexamination Of The Effect Of Rapid Military Spending On Inflation, Farrokh Nourzad

Economics Faculty Research and Publications

The hypothesis that rapid defense buildups contribute to inflation recently has been rejected by Donald F. Vitaliano. In this paper, it is argued that this result is misleading, given that it is obtained under the implausible assumption of constancy of the expected real rate of interest. The hypothesis is reexamined using a well-known measure of the expected inflation rate, and it is found that growth of defense spending has a statistically significant positive effect on the rate of price inflation.

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Monetary Aggregates As A Target Variable: A Comment, Abdur Chowdhury Jul 1987