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Illegal trade in the Iranian economy: Evidence from a structural model

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  • Farzanegan, Mohammad Reza

Abstract

This study investigates the causes and consequences of import and export smuggling and estimates its relative size in Iran from 1970 to 2002. Multiple Indicators-Multiple Causes (MIMIC) modeling and trade misinvoicing are used to compute the latent variable of smuggling. The results indicate that the penalty rate for smuggling and the quality of economic and political institutions reduce smuggling, while tariffs and black market premia increase the incentives for illegal trade. More trade openness is associated with greater illegal trade in the case of Iran. On average, smuggling in Iran has been approximately 13% of total trade.

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Bibliographic Info

Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 25 (2009)
Issue (Month): 4 (December)
Pages: 489-507

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Handle: RePEc:eee:poleco:v:25:y:2009:i:4:p:489-507

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Web page: http://www.elsevier.com/locate/inca/505544

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Keywords: Smuggling Structural equation model Iran Illegal trade Institutions;

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References

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Citations

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Cited by:
  1. Buehn, Andreas & Farzanegan, Mohammad Reza, 2013. "Hold your breath: A new index of air pollution," Energy Economics, Elsevier, vol. 37(C), pages 104-113.
  2. Yalta, A. Yasemin & Demir, Ishak, 2010. "The Extent of Trade Mis-Invoicing in Turkey: Did Post-1990 Policies Matter?," MPRA Paper 30186, University Library of Munich, Germany.
  3. Farzanegan, Mohammad Reza, 2011. "Military spending and economic growth: the case of Iran," MPRA Paper 35498, University Library of Munich, Germany.
  4. Amit K. Biswas & Mohammad Reza Farzanegan & Marcel Thum, 2011. "Pollution, Shadow Economy and Corruption: Theory and Evidence," CESifo Working Paper Series 3630, CESifo Group Munich.
  5. Rudolph, Alexandra & Schneider, Friedrich, 2013. "International Human Trafficking: Measuring Clandestinity by the Structural Equation Approach," IZA Discussion Papers 7867, Institute for the Study of Labor (IZA).
  6. A. Bühn & M.R. Farzanega, 2011. "Hold Your Breath: A New Index of Air Quality," Working Papers 11-24, Utrecht School of Economics.
  7. de Jong, Eelke & Bogmans, Christian, 2011. "Does corruption discourage international trade?," European Journal of Political Economy, Elsevier, vol. 27(2), pages 385-398, June.
  8. Andreas Buehn & Mohammad Reza Farzanegan, 2013. "Impact of education on the shadow economy: Institutions matter," Economics Bulletin, AccessEcon, vol. 33(3), pages 2052-2063.

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