“…Finally, latent variable models consider the mixture of general economic (GDP per capita), taxation (share of direct taxation, share of indirect taxation and social security contribution), legal (state regulation), societal (tax morale), labour market (employment quota, unemployment quota, average working time per week) and monetary (change of local currency per capita) indicators (i.e. MIMIC model) (Schneider & Buehn, 2013;Trebicka, 2014;Galloppo et al, 2015) or are based on a two-sector (household and business) dynamic general equilibrium which unites such indicators as household utility, consumption and leisure, household capital units, business returns to scale production, total factor productivity, and tax rate (Elgin & Oztunali, 2012;Elgin & Schneider, 2013). Among many possible advantages of these models is consideration of a comparatively wide dataset (Elgin & Schneider, 2013).…”