Simulating the Turkish economy under informality

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Tezin Türü: Yüksek Lisans

Tezin Yürütüldüğü Kurum: Orta Doğu Teknik Üniversitesi, İktisadi ve İdari Bilimler Fakültesi, İktisat Bölümü, Türkiye

Tezin Onay Tarihi: 2014

Öğrenci: ÖZGEN ÖZTÜRK

Danışman: PINAR DERİN GÜRE

Özet:

The existence of a large shadow economy is one of the most important problems of developing countries, since informality mitigates tax revenues of governments, causes inefficiency in the economy and disrupts the welfare of the society. The aim of this study is to analyze the effects of the existence of a large informal sector on the macroeconomic variables and welfare of Turkey. The constructed model for this purpose is a two sector overlapping generations (OLG) model. As far as I know, this is the first study in which the model incorporates endogenous labor supply, population growth, bequest motive, Pay-As-You-Go (PAYG) pension system and informality in a 55-period OLG environment for Turkey. Simulation results indicate that, besides the costs to the government, the existence of a large shadow economy is also detrimental to the households and firms of the informal economy and disrupts the welfare of the whole society in Turkey.