Trade Misinvoicing: The Dark Side of World Trade

25 Pages Posted: 25 Aug 2011

See all articles by Andreas Buehn

Andreas Buehn

University of Cooperative Education Bautzen

Stefan Eichler

Leibniz Universit├Ąt Hannover; Halle Institute for Economic Research

Date Written: August 2011

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.

Suggested Citation

Buehn, Andreas and Eichler, Stefan, Trade Misinvoicing: The Dark Side of World Trade (August 2011). The World Economy, Vol. 34, Issue 8, pp. 1263-1287, 2011, Available at SSRN: https://ssrn.com/abstract=1916505 or http://dx.doi.org/10.1111/j.1467-9701.2011.01375.x

Andreas Buehn

University of Cooperative Education Bautzen ( email )

Loebauer Strasse 1
Bautzen, 02625
Germany

Stefan Eichler

Leibniz Universit├Ąt Hannover

Institute of Money and International Finance
Koenigsworther Platz 1
Hannover, 30167
Germany

Halle Institute for Economic Research ( email )

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
D-06017 Halle, 06108
Germany

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