Misreporting Trade: Tariff Evasion, Corruption, and Auditing Standards

36 Pages Posted: 7 Sep 2016 Last revised: 27 Mar 2022

See all articles by Derek Kellenberg

Derek Kellenberg

University of Montana

Arik Levinson

Georgetown University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: September 2016

Abstract

In official international trade statistics, annual commerce between every pair of countries is reported twice: once by the importing country and once by the exporter. These double reports provide an opportunity for audit. In principle, the two reported trade values should differ systematically only by transport costs, because the values reported by importers include freight and insurance. But in practice, after controlling for distance and other standard trade costs, the remaining gaps between importer- and exporter-reported trade vary systematically with GDP, tariffs and taxes, auditing standards, corruption, and trade agreements, suggesting that firms intentionally misreport trade data. These misreports have implications for trade agreements and domestic fiscal policy, and for empirical assessments of the efficacy of those policies.

Suggested Citation

Kellenberg, Derek and Levinson, Arik M., Misreporting Trade: Tariff Evasion, Corruption, and Auditing Standards (September 2016). NBER Working Paper No. w22593, Available at SSRN: https://ssrn.com/abstract=2835851

Derek Kellenberg (Contact Author)

University of Montana ( email )

Missoula, MT 59812
United States

Arik M. Levinson

Georgetown University - Department of Economics ( email )

Washington, DC 20057
United States
202-687-5571 (Phone)
202-687-6102 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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