This paper investigates the effect of electronic payments technology on firms’ tax compliance in a large developing economy. We consider India’s demonetization policy which, by limiting the availability of cash, led to a large increase in the use of electronic forms of payments. Using...

This paper investigates the effect of electronic payment technology on tax compliance in a large developing economy. We consider India's demonetization policy which, by limiting cash availability, led to a large increase in the use of electronic forms of payments. Using administrative data on...

Can introducing Central Bank Digital Currency (CBDC) improve social welfare? We construct a dual currency model to study whether introducing CBDC with a recordkeeping technology can reduce tax evasion incentives in cash transactions, and further achieve a better allocation than in a cash-only...

This paper studies the implications of tax evasion for the optimal design of central bank digital currency (CBDC). I build a general equilibrium framework to explicitly allow tax evasion by agents and tax audits by a government. I find that as long as CBDC offers less anonymity than cash,...

In a simple cash-credit model, I study the effects of the combination of costly tax collection and tax evasion on fiscal and monetary policy for optimal resource allocation. Allowing the informal sector to use cash more intensively than the formal sector, I compute the optimal interest and tax...

Since the credit crisis of 2007-8 the global economy has been in a stagnant condition, with little growth, little wage increase (Gordon, 2014), but a division in asset devaluation, with oil collapsing in recent years and many other commodities, likewise losing ground while gold and stocks rising...

In a simple cash-credit model, I study the effects of the combination of costly tax collection and tax evasion on fiscal and monetary policy for optimal resource allocation. Allowing the informal sector to use cash more intensively than the formal sector, I compute the optimal interest and tax...