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Tariff evasion effects in quantitative general equilibrium

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  • Egger, Peter H.
  • Larch, Mario

Abstract

One consequence of tariff evasion is that a country’s average statutory import tariff rate deviates from the average applied tariff rate. We deliver an approach to estimate the average evasion rate in multi-country general equilibrium. We find evidence of significant average tariff evasion which leads to downward-biased estimates of the elasticity-of-substitution parameter in new trade theory models and associated upward-biased comparative static welfare effects of trade liberalization.

Suggested Citation

  • Egger, Peter H. & Larch, Mario, 2012. "Tariff evasion effects in quantitative general equilibrium," Economics Letters, Elsevier, vol. 116(2), pages 262-264.
    • Handle: RePEc:eee:ecolet:v:116:y:2012:i:2:p:262-264
    DOI: 10.1016/j.econlet.2012.03.005
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    References listed on IDEAS

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    1. Javorcik, Beata S. & Narciso, Gaia, 2008. "Differentiated products and evasion of import tariffs," Journal of International Economics, Elsevier, vol. 76(2), pages 208-222, December.
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    7. James E. Anderson & Eric van Wincoop, 2001. "Borders, Trade and Welfare," Boston College Working Papers in Economics 508, Boston College Department of Economics.
    8. Andrew K. Rose, 2000. "One money, one market: the effect of common currencies on trade," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 15(30), pages 08-45.
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    Cited by:

    1. Benedikt Heid & Mario Larch & Yoto V. Yotov, 2021. "Estimating the effects of non‐discriminatory trade policies within structural gravity models," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(1), pages 376-409, February.
    2. Heid, Benedikt & Larch, Mario, 2016. "Gravity with unemployment," Journal of International Economics, Elsevier, vol. 101(C), pages 70-85.
    3. Piermartini, Roberta & Yotov, Yoto, 2016. "Estimating Trade Policy Effects with Structural Gravity," School of Economics Working Paper Series 2016-10, LeBow College of Business, Drexel University.
    4. Mohammad Farhad & Michael Jetter & Abu Siddique & Andrew Williams, 2018. "Misreported Trade," CESifo Working Paper Series 7150, CESifo.

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    More about this item

    Keywords

    Tariff evasion; Gravity model; International trade;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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