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Title:Illegal trade in the Iranian economy: evidence from a structural model PDF Logo
Authors:Farzanegan, Mohammad Reza
Issue Date:2008
Series/Report no.:CESifo working paper 2397
Abstract:This study investigates the main causes and consequences of import and export smuggling and estimates the relative index of smuggling in Iran from 1970 to 2002. The Multiple Indicators - Multiple Causes (MIMIC) econometric modelling is used for a comprehensive analysis of the latent variable of smuggling. The main results of this paper indicate that the rate of fine for smuggling and the general level of education reduce smuggling, while the tariff burden increases the incentives for illegal trade. More trade openness accompanies more illegal trade for the case of Iran. On average, the relative size of smuggling is about 13% of the total trade in Iran. The absolute amount of smuggling per year is about USD3 billion.
structural equation model
illegal trade
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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