Trade policy changes, tax evasion and Benford’s law
This paper draws attention to import duty evasion as a margin through which firms adjust to changes in trade policy. This margin is different from the other forms of adjustment, as it can be employed very fast and thus it may constitute the initial reaction to the shock before a slower adjustment th...
| Main Authors: | , |
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| Format: | Journal article |
| Sprog: | English |
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Elsevier
2020
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| _version_ | 1826306220073418752 |
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| author | Demir, B Javorcik, B |
| author_facet | Demir, B Javorcik, B |
| author_sort | Demir, B |
| collection | OXFORD |
| description | This paper draws attention to import duty evasion as a margin through which firms adjust to changes in trade policy. This margin is different from the other forms of adjustment, as it can be employed very fast and thus it may constitute the initial reaction to the shock before a slower adjustment through the other channels takes place. The study also proposes a new method of detecting tax evasion in international trade, based on deviations from Benford's law. It applies the method in the context of an unexpected policy change in Turkey that increased the cost of import financing. The results are consistent with an immediate increase in tax evasion in the affected import flows, which dies down a year later. A standard approach to detecting tariff evasion, based on “missing trade”, confirms these conclusions. |
| first_indexed | 2024-03-07T06:44:38Z |
| format | Journal article |
| id | oxford-uuid:fa71e4a0-51fd-42d2-94d8-a0cfb3c0400b |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-03-07T06:44:38Z |
| publishDate | 2020 |
| publisher | Elsevier |
| record_format | dspace |
| spelling | oxford-uuid:fa71e4a0-51fd-42d2-94d8-a0cfb3c0400b2022-03-27T13:05:58ZTrade policy changes, tax evasion and Benford’s lawJournal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:fa71e4a0-51fd-42d2-94d8-a0cfb3c0400bEnglishSymplectic ElementsElsevier2020Demir, BJavorcik, BThis paper draws attention to import duty evasion as a margin through which firms adjust to changes in trade policy. This margin is different from the other forms of adjustment, as it can be employed very fast and thus it may constitute the initial reaction to the shock before a slower adjustment through the other channels takes place. The study also proposes a new method of detecting tax evasion in international trade, based on deviations from Benford's law. It applies the method in the context of an unexpected policy change in Turkey that increased the cost of import financing. The results are consistent with an immediate increase in tax evasion in the affected import flows, which dies down a year later. A standard approach to detecting tariff evasion, based on “missing trade”, confirms these conclusions. |
| spellingShingle | Demir, B Javorcik, B Trade policy changes, tax evasion and Benford’s law |
| title | Trade policy changes, tax evasion and Benford’s law |
| title_full | Trade policy changes, tax evasion and Benford’s law |
| title_fullStr | Trade policy changes, tax evasion and Benford’s law |
| title_full_unstemmed | Trade policy changes, tax evasion and Benford’s law |
| title_short | Trade policy changes, tax evasion and Benford’s law |
| title_sort | trade policy changes tax evasion and benford s law |
| work_keys_str_mv | AT demirb tradepolicychangestaxevasionandbenfordslaw AT javorcikb tradepolicychangestaxevasionandbenfordslaw |