Working Paper: NBER ID: w22593
Authors: Derek Kellenberg; Arik Levinson
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.
Keywords: Trade Misreporting; Tariff Evasion; Corruption; Auditing Standards
JEL Codes: F14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| higher tariffs (F19) | significant underreporting of imports (F10) |
| stronger auditing and accounting standards (M48) | decrease in underreporting (C83) |
| decrease in exporter corruption (F69) | decrease in reported trade gap (F19) |
| higher domestic tax rates (H29) | more underreported trade (F19) |