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Pakel, Banu Demir
Javorcik, Beata Smarzynska
Year of Publication: 
Series/Report no.: 
CESifo Working Paper No. 7266
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.
trade elasticity
tax evasion
trade financing
border taxes
Benford's law
Document Type: 
Working Paper

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