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Forensics, Elasticities and Benford's Law

Author

Listed:
  • Banu Demir Pakel
  • Beata Smarzynska Javorcik
  • Beata Smarzynska Javorcik

Abstract

Estimates of the trade elasticity based on actual trade policy changes are scarce, and the few that exist are all over the place. This paper offers a setting where an exogenous increase in a border tax can be used to estimate the trade elasticity. It shows theoretically and empirically that if evasion of border taxes is not taken into account, the trade elasticity is estimated with a large downward bias, leading to miscalculation of gains from trade. The paper also contributes to the literature by proposing two new methods of detecting evasion of border taxes.

Suggested Citation

  • Banu Demir Pakel & Beata Smarzynska Javorcik & Beata Smarzynska Javorcik, 2018. "Forensics, Elasticities and Benford's Law," CESifo Working Paper Series 7266, CESifo.
    • Handle: RePEc:ces:ceswps:_7266
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    References listed on IDEAS

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    1. Feenstra, Robert C., 1995. "Estimating the effects of trade policy," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 30, pages 1553-1595, Elsevier.
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    Cited by:

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    2. Mayneris, Florian & Martin, Julien & Theophile, Ewane, 2020. "The price of remoteness: Product availability and local cost of living in Ethiopia," CEPR Discussion Papers 14515, C.E.P.R. Discussion Papers.

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    More about this item

    Keywords

    trade elasticity; tax evasion; trade financing; border taxes; Benford's law;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General

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