In a recent article Davidson, Lawrence and Wilson propose a model showing that, in the presence of distortionary taxation and goods of different quality, tax evasion can be an optimal device. Here, we show that this result, although quite interesting, cannot be generalised to a framework where...

In his seminal paper, Baumol (1967) argued that public sector activities, like other labour-intensive productions, are destined to grow as a ratio of total GDP because of the comparatively lower productivity growth experienced by labour inputs in these sectors relatively to capital-intensive...

Most tax evasion models are set in a timeless environment and assume that only income flow can be evaded. This framework is not suitable for financial market where an evasion decision is taken in an intertemporal framework and an asset itself can be evaded. We assume that a representative agent...