This dissertation titled "Essays in the Political Economy of Inflation" is comprised of three papers which study the problem of inflation from a political-institutional perspective. All the three essays apply modern technical tools of macroeconomics to study different factors that affect the choice of policies. It is shown that these factors are crucial in shaping the governance structure conducive for policy effectiveness. The complex political-economic environment is difficult to study with traditional models of economic policy based on a benevolent social planner maximizing the utility of a representative individual. This thesis, therefore, approaches the political economy of inflation from a realistic practical side. The first essay titled "Taxing the unobservable: The impact of shadow economy oninflation and taxes", is motivated from several theoretical and empirical studies which argue that optimal inflation rate increases in the size of informal economy. In this paper, we construct a small theoretical model that has two key components. First, it explicitly models the government's choice for income or inflation tax. Our framework is general and does not impose any condition about the nature of the government (i.e., it does not require government to be necessarily benevolent or corrupt). Secondly, we explicitly consider the shadow economy in the government's objective function. It allows us to see how it impacts the tax burden and inflation. Our theoretical model indicates an increasing marginal cost of taxes and an increasing rate of inflation in the shadow economy. The principle of marginal substitution rationalizes the government's choice of inflation tax over income tax.

Submitted by Anna-Katharina Lenz (anna.lenz@fgvmail.br) on 2018-02-06T17:48:52Z No. of bitstreams: 1 PHD_THESIS_LENZ.pdf: 4850763 bytes, checksum: a3934582f5eeb8d71db1b0f401811ecc (MD5) / Approved for entry into archive by ÁUREA CORRÊA DA FONSECA CORRÊA DA FONSECA (aurea.fonseca@fgv.br) on 2018-02-06T18:33:55Z (GMT) No. of bitstreams: 1 PHD_THESIS_LENZ.pdf: 4850763 bytes, checksum: a3934582f5eeb8d71db1b0f401811ecc (MD5) / Made available in DSpace on 2018-02-08T11:34:33Z (GMT). No. of bitstreams: 1 PHD_THESIS_LENZ.pdf: 4850763 bytes, checksum: a3934582f5eeb8d71db1b0f401811ecc (MD5) Previous issue date: 2017-07-18 / This PhD thesis aspires to contribute to the literature on entrepreneurship and economic development by engaging in the discussion of how to foster formalization of microentrepreneurs in developing countries in the short and long-run and microentpreneurs’ drivers for the acceptance of external learning activities. How can we increase formalization of microentrepreneurs? (Paper 1) I address the first question in the paper “Nudging into Budging” in which I conduct a Randomized Field Experiment in one of the major Favelas in Rio de Janeiro. While missing information about the existence of the MEI program and it’s features might be a plausible reason for low take-up, I hypothesize that information alone is not enough to move a large number of microentrepreneurs to take-up due to attention biases. To test this hypothesis, the intervention makes use of additional nudges to remind people in cellphone messages about the content of the information session. My results show that neither an information session nor text messages alone can increase take-up, but that the combination of both increases formalization by seven percent. The results suggest that combining information with behavioral nudges in order to induce the take-up of a public policy program can be a cost-efficient approach. How can we increase microentrepreneurs tax and social security payments? (Paper 2) The paper “Take the wind out or hoist the sails? Heterogeneous treatment effects of a behavioral intervention on small entrepreneurs” addresses my second research question. I hypothesize that public policy intervention can be fruitful and cost-efficient in increasing payments if they account for individual pre-performance trends. For this purpose, I study the payment of microentrepreneurs contributions in Brazil before and after a nationwide intervention in which bills were sent in a booklet for one calendar year to all formalized microentrepreneurs’ households. My results show that the policy intervention works well for microentrepreneurs with irregular payment histories in the first half year after formalizing, but that the intervention has a negative effect on those microentrepreneurs with flawless payment history in this period. In the light of increasing public policy initiative that try to “nudge” people into desired behavior, the paper contributes to the literature by emphasizing the need to account for heterogeneity in behavioral interventions. What explains the take-up of business support programs by microentrepreneurs? (Paper 3) I conclude this PhD thesis with the paper “Distress calls for help: The effect of a business crisis on the take-up of business support services by microentrepreneurs”, in which I hypothesize that microentrepreneurs may be more inclined to take-up training in moments of distress. I study an individual-level longitudinal dataset of monthly tax payments of microentrepreneurs who procure business support services and those who do not. My results show that microentrepreneurs are particularly prone to the take-up of business support services if they undergo a critical business situation represented by a decline in tax payment and in credit scores.

Made available in DSpace on 2016-06-02T19:50:21Z (GMT). No. of bitstreams: 1 5522.pdf: 1352042 bytes, checksum: 83c353b1b981d5dfbac220b467cccf50 (MD5) Previous issue date: 2013-07-12 / The non-inspected slaughter is a serious problem that affects the sheep-raising sector in Brazil. Estimates indicate that more than 90% of the sheep meat traded nationwide, is carried out in non-inspected places. Several are the agents of this production chain who perform the non-inspected slaughter, among whom are farmers. The aim of this study was to analyze, from the perspective of institutional environment, the reasons that lead farmers to carry out slaughter on farm, as a commercial activity, at the city of Tauá (CE), Brazil. Under this scope, comparative analyzes of the socioeconomic, technological and marketing of farmers who do not slaughter their sheep were performed, as well as with sheep-slaughterer farmers in the county. The city of Tauá was chosen as the location for this study due to its importance to sheep sector in Ceará State and the Northeastern Brazil. Using the survey research methodology, 336 sheep-raising farmers were interviewed. The following methods were used for statistical analysis: chi-squared test, Mean-testing and Fisher's exact test. The results demonstrated that 16.7% of the producers perform sheep slaughtering, while 83.3% usually trade live sheep to dealers. The theoretical referencing used was the New Institutional Economics and literature on the informal economy, from which hypotheses were developed, about possible determinants for farmers decision.. Eight determinant factors were identified and 2 distinguishing characteristics of producers who slaughter, from those who do not, in the Tauá county. / O abate não inspecionado é um grave problema que afeta o setor da ovinocultura de corte em todo o Brasil. Estimativas indicam que mais de 90% da carne ovina comercializada em todo território nacional seja proveniente de abate realizado em locais não inspecionados. Diversos são os agentes desta cadeia produtiva que realizam o abate não inspecionado, dentre os quais estão os produtores rurais. O objetivo do presente estudo foi analisar, a partir das características do ambiente institucional, quais são os fatores que levam os produtores rurais a realizarem o abate de ovinos para fins comerciais nas propriedades rurais no município de Tauá (CE). Para tanto, foram realizadas as análises comparativas do perfil socioeconômico, tecnológico e de comercialização dos produtores que não abatem e dos produtores que abatem ovinos no município. O município de Tauá foi escolhido como o local para a realização deste estudo em função de sua relevância para a ovinocultura de corte do Estado do Ceará e da região Nordeste. Utilizando o método de pesquisa do tipo survey foram entrevistados 336 produtores rurais criadores de ovinos. Foram utilizados os seguintes métodos de análise estatística: Qui-quadrado, Teste das Médias e Teste Exato de Fisher. Os resultados da análise mostram que 16,7% dos produtores realizam o abate de ovinos, enquanto 83,3% costumam vender os ovinos vivos para os atravessadores ou para os marchantes. O referencial teórico que fundamentou as análises foi a Nova Economia Institucional e literatura sobre economia informal, a partir do qual foram elaboradas as hipóteses sobre os possíveis determinantes para a realização do abate de ovinos pelos produtores rurais. Foram identificados oito fatores determinantes do abate realizado pelos produtores rurais e duas características diferenciadoras dos produtores que realizam esta atividade em relação aos produtores que não realizam o abate no município de Tauá.

This masters thesis deals with the phenomena of corruption and its methods of measuring. The objective of this thesis was to fully analyze the problem of corruption, its types, causes and consequences. This work describes organizations that measure corruption and the methods of its measuring. Most of the methods are based on the soft data gained in opinion polls. That is why the aim of this thesis was to link Corruption Perception Index with the truly measurable data as world tax index and size of shadow economy. The main finding of the work is negative correlation between world tax index and CPI and positive correlation between size of shadow economy and CPI.

This thesis is aimed at cashless payments which have recently gained worldwide significance. Cash is being gradually phased-out by card transactions and mobile payments via non-bank provider of payment services. A question arises of what would happen if cash would disappear in its entirety and we would find ourselves in a "cashless society". This topic which at first glance appears to be utopian is the subject of this thesis. The first part compares the market of cashless payments in the Czech Republic and in northern Europe (which is amongst the most developed), in particular with regard to the use of cards and mobile payments. The second part is concerned with the phenomenon of shadow economy and the influence of cashless payments on its volume. Concrete recommendations for the Czech economy are also the part of this chapter. The final part hits the essence of the issue and deals with concrete pros and cons of going cashless. The chapter is systematically divided into three parts - security, cost-benefit analysis and legal aspects.

Cette dissertation intitulé « Essays in the Political Economy of Inflation » est compris de trois papiers qui étudient le problème d'inflation d'une perspective politique-institutionnel. Tous les trois essais appliquent des outils techniques modernes de macroéconomie pour étudier des facteurs différents qui affectent le choix de politiques. Il est montré que ces facteurs sont cruciaux dans former la structure de gouvernance favorable pour l'efficacité de politique. L'environnement politique-économique complexe est difficile d'étudier avec les modèles traditionnels de politique économique fondée sur un projeteur social bienveillant qui maximise l'utilité d'un individu représentatif. Cette thèse, donc, approche l'économie politique d'inflation d'un côté pratique réaliste.Le premier essai a autorisé «Taxing the unobservable: The impact of shadow economy oninflation and taxes», est motivé par plusieurs études théoriques et empiriques qui se dispute que le taux d'inflation optimal augmente dans la taille de l'économie simple. Dans ce papier, nous construisons un petit modèle théorique qui a deux composants clés. Premièrement, il modèle explicitement le choix du gouvernement pour l'impôt de revenu ou inflation. Notre cadre est général et n'impose pas de la condition de la nature du gouvernement (i.e., il n'exige pas le gouvernement pour être nécessairement bienveillant ou corrompu). Deuxièmement, nous considérons explicitement l'économie l’informel (shadow economy) dans la fonction du gouvernement objectif. Il nous permet de voir comment il influe la charge fiscale et l'inflation. Notre modèle théorique indique un coût marginal croissant d'impôts et un taux croissant d'inflation dans l'économie d'ombre (shadow economy). Le principe de remplacement marginal rationalise le choix du gouvernement d'impôt d'inflation sur l'impôt sur le revenu. / This dissertation titled “Essays in the Political Economy of Inflation” is comprised of three papers which study the problem of inflation from a political-institutional perspective. All the three essays apply modern technical tools of macroeconomics to study different factors that affect the choice of policies. It is shown that these factors are crucial in shaping the governance structure conducive for policy effectiveness. The complex political-economic environment is difficult to study with traditional models of economic policy based on a benevolent social planner maximizing the utility of a representative individual. This thesis, therefore, approaches the political economy of inflation from a realistic practical side. The first essay titled “Taxing the unobservable: The impact of shadow economy oninflation and taxes”, is motivated from several theoretical and empirical studies which argue that optimal inflation rate increases in the size of informal economy. In this paper, we construct a small theoretical model that has two key components. First, it explicitly models the government’s choice for income or inflation tax. Our framework is general and does not impose any condition about the nature of the government (i.e., it does not require government to be necessarily benevolent or corrupt). Secondly, we explicitly consider the shadow economy in the government’s objective function. It allows us to see how it impacts the tax burden and inflation. Our theoretical model indicates an increasing marginal cost of taxes and an increasing rate of inflation in the shadow economy. The principle of marginal substitution rationalizes the government’s choice of inflation tax over income tax.

This dissertation thesis deals with the notion of "vekslactvi" in socialist Czechoslovakia and with a social group called "vekslaci", which orchestrated illicit trade with foreign currencies, the so called tuzex vouchers, and smuggled consumer goods. The analysis lays emphasis on the daily operations of the "veksláci" and also on the commodities which they traded. From this perspective, "vekslaci" could be treated as a driving force within the Czechoslovak black market. In addition to the basic principles of "veksl", the chapter also presents a certain typology of traffickers and mutual hierarchical links within this specific community. The lifestyle of the "vekslák subculture" is also a subject of historical reconstruction as the thesis seeks to place "veksláci" in the context of the Czechoslovak society before 1989. The thesis also deals with the social and economic circumstances that enabled the birth of a peculiar social group of "vekslaci". Among others, it focuses on the role of the Tuzex hard currency shops, which was introduced in order to sell (mostly imported) consumer goods in exchange for foreign currencies or special vouchers. Attitude of the Czechoslovak state regarding the issue of "veksláctví" is also a subject of analysis. The research focuses on legislation, which gradually...

The objective of this thesis is to analyze the impact of the electronic records of sales (ERS) implemented on December 1, 2016, in the Czech Republic. The ERS orders given entrepreneurs to use special cash boxes and to send data about single sales to the Financial Authority immediately after each transaction. Experience shows that the ERS reduced tax evasion and the shadow economy. This thesis fills a gap in literature as no study has yet examined the impact of ERS on macroeconomic variables - gross domestic product (GDP) per capita, unemployment rate and harmonized consumer price index (HCPI). To analyze it, I apply SCM by Abadie and Gardeazabal (2003), Abadie et al. (2010) and Abadie et al. (2015) that proposes the way how to evaluate the impact of political interventions using a quantitative approach. Using data from the Eurostat and OECD databases from Q1 2004-Q3 2019, the method allows me to construct a counterfactual outcome for GDP per capita, unemployment rate and HCPI in the absence of the implementation of the ERS. I also apply the extension of original SCM - generalize synthetic control method by Xu (2017) and augmented synthetic control method by Ben-Michael et al. (2018) as robustness checks. Moreover, the interference procedures include the modified confidence interval by Firpo and Possebom...

Tiesą sakant, priklausomybė nuo pinigų ir valdžios yra dvi pagrindinės priežastis neskaidriam ekonominiam sektoriui susiformuoti. Kad ir kaip bebūtų keista, gyvenimo faktas – tas, jog dideliam pasaulio populiacijos procentui, šešėlinis verslas tampa išgyvenimo priemone, nors Lietuvos Pramonininkų Konfederacijos pareiškimu: „<...> neapskaityta ekonominė veikla, neoficialus darbas, sukčiavimas ir mokesčių vengimas ne tik kenkia šalies įvaizdžiui, ardo oficialią rinką ir konkurencingumą, bet, kartu, negailestingai griauna sąžiningą verslą<...>“. Šio darbo siekis – įvertinti ir suprasti Lietuvos šešėlinės ekonomikos poveikį verslo sėkmei arba legaliai veiklai. Atliktų tyrimų uždaviniai – interpretuoti bendrą pastarojo ekonominio reiškinio kilmės ir šaltinių analizę, apžvelgti, kaip jis atsispindi pinigų statistikoje bei kokia įtaka turi oficialiam verslui, naudojant Tanzi ir Gutmman monetarinius metodus, koreliacija bei Eilat /Zinnes regresijos funkcija. Tyrimų rezultatai apsibrėžtam periodui, nuo 1995 iki 2007 metų, parodė, jog tarp apskaitytos ir neapskaitytos ekonomikų vyrauja neigiamas ryšys, kuris išreiškia substituto efekto pozicionavimą pajamų efekto atžvilgių. Vadinasi, apskaitytoms pajamoms sumažėjus 1LT, šešėlinės pajamos išauga 16 centų. Tuo tarpu, 1LT išaugus apskaitytam BVP, neoficialusis - sumažėja 43 centais. Kitą vertus, monetarinis metodas parodė, jog šešėlinė ekonomika yra glaudžiai susijusi su oficialiais kintamaisiais, todėl norint sumažinti neapskaityto... [toliau žr. visą tekstą] / Actually, - addiction to money and governance are two main reasons why legal shadow economy arises. As strange it seems, it has not only negative impact, but also a positive one to the official economy. And it‘s a fact of life, that for a large part of the worlds population, the "shadow economy" has become a means of survival, while, accordingly to The Confederation of Lithuanian Industrialists declaration, “<…> unaccounted economic activities, illegal jobs, cheating and tax evasion harm the state, disturb the market and competition and demonstrably ruin and discredit fair business <...>”. The aim of this work - is to evaluate and understand the impact of Lithuania's shadow economy to the official one. The main goals of the research – interpellate the analysis of shadow economy genesis and origins and review how it reflects in nummary statistics or how influence officially accounted economy, using Tanzi’s and Gutmann’s monetary approaches, correlation and Eilat/Zinnes regression function. Exploration findings for the entire period of 1995-2007 confirms, that the unrecorded and recorded economies in Lithuania are negatively related, suggesting that the substitution effect dominates the income effect. And 1 LT fall in recorded income is associated with a 16 cent increase in the unrecorded economy and that a 1LT increase in recorded GDP is associated with a 43 cent decline in unrecorded income. On the other hand, monetary approach showed that shadow economy is closely related... [to full text]

The dissertation “Informal Economic Activities” takes a comprehensive approach to the informal economy by studying traditional shadow economic activities, household DIY activities, and the smuggling of illegal and legal goods. Chapter 2 analyzes shadow economic and DIY activities and presents a dual estimation for the development of both types of informal economic activities in Germany from 1970 to 2005. It also considers the impact of German reunification on shadow economic and DIY activities and employs a proper estimate of domestic currency in circulation within Germany as an indicator variable for the shadow economy. Chapter 3 studies an informal economic activity that has attracted much attention recently: legal goods smuggling, or the illegal trade of otherwise legal goods. The main channel of this type of smuggling is the falsification of trade documents. By reporting false amounts of exports and/or imports to authorities smugglers, or trade misinvoicers, seek to avoid paying taxes and/or tariffs. Chapter 4 widens the analysis of smuggling to the smuggling of illegal goods and studies the smuggling of legal and illegal goods across the U.S.-Mexico border in order to improve the understanding of illegal trade. Studying the U.S.-Mexican case is particularly interesting as most illegal drugs and immigrants enter the United States via the Mexican border. The empirical analyses in the dissertation “Informal Economic Activities” are based on structural equation models (SEMs). The results demonstrate that the informal economy is significant and that growth of the informal economy is not exclusive to developing countries, although it is a more serious problem in these countries. Moreover, although the informal economy covers a wide range of rather diverse economic activities, the dissertation works out that a few similarities exist. These are important, especially for policymakers, in first understanding what drives informal economic activities and second designing appropriate policies to deter them.