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Trade Misinvoicing: The Dark Side of World Trade

Trade Misinvoicing: The Dark Side of World Trade We analyse the determinants of trade misinvoicing using data on 86 countries from 1980 to 2005. In a simple microeconomic framework, we derive the determinants of four different types of trade misinvoicing taking into account that only the financial incentives determine whether and how much exports/imports to underinvoice or overinvoice, whereas the deterrents only affect the extent of misinvoicing. The hypothesised determinants are tested using data on discrepancies in bilateral trade with the United States. We find that the black market premia and tariffs motivate illegal trading activities. Higher financial penalties effectively act as a deterrent to this crime. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The World Economy Wiley

Trade Misinvoicing: The Dark Side of World Trade

The World Economy , Volume 34 (8) – Aug 1, 2011

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References (28)

Publisher
Wiley
Copyright
© 2011 Blackwell Publishing Ltd
ISSN
0378-5920
eISSN
1467-9701
DOI
10.1111/j.1467-9701.2011.01375.x
Publisher site
See Article on Publisher Site

Abstract

We analyse the determinants of trade misinvoicing using data on 86 countries from 1980 to 2005. In a simple microeconomic framework, we derive the determinants of four different types of trade misinvoicing taking into account that only the financial incentives determine whether and how much exports/imports to underinvoice or overinvoice, whereas the deterrents only affect the extent of misinvoicing. The hypothesised determinants are tested using data on discrepancies in bilateral trade with the United States. We find that the black market premia and tariffs motivate illegal trading activities. Higher financial penalties effectively act as a deterrent to this crime.

Journal

The World EconomyWiley

Published: Aug 1, 2011

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