Advanced Search
MyIDEAS: Login to save this paper or follow this series

Illegal Trade in the Iranian Economy: Evidence from a Structural Model

Contents:

Author Info

  • Mohammad Reza Farzanegan

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 $3 billion.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2008/wp-cesifo-2008-09/cesifo1_wp2397.pdf
Download Restriction: no

Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2397.

as in new window
Length:
Date of creation: 2008
Date of revision:
Handle: RePEc:ces:ceswps:_2397

Contact details of provider:
Postal: Poschingerstrasse 5, 81679 Munich
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Email:
Web page: http://www.cesifo.de
More information through EDIRC

Related research

Keywords: smuggling; structural equation model; Iran; illegal trade;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Eilat, Yair & Zinnes, Clifford, 2002. "The Shadow Economy in Transition Countries: Friend or Foe? A Policy Perspective," World Development, Elsevier, Elsevier, vol. 30(7), pages 1233-1254, July.
  2. Pitt, Mark M., 1981. "Smuggling and price disparity," Journal of International Economics, Elsevier, Elsevier, vol. 11(4), pages 447-458, November.
  3. Rauch, James E & Evans, Peter B., 1999. "Bureaucratic Structure and Bureaucratic Performance in Less Developed Countries," University of California at San Diego, Economics Working Paper Series, Department of Economics, UC San Diego qt0sb0w38d, Department of Economics, UC San Diego.
  4. Richard A. Jensen & Jerry Thursby & Marie Thursby, 1988. "Smuggling, Camouflaging, and Market Structure," NBER Working Papers 2630, National Bureau of Economic Research, Inc.
  5. Dornbusch, Rudiger, et al, 1983. "The Black Market for Dollars in Brazil," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 98(1), pages 25-40, February.
  6. Donogh C. McDonald, 1985. "Trade Data Discrepancies and the Incentive to Smuggle: An Empirical Analysis (Divergences dans les données sur les échanges commerciaux et attrait de la contrebande: analyse empirique) (Discrepa," IMF Staff Papers, Palgrave Macmillan, vol. 32(4), pages 668-692, December.
  7. Benhabib, Jess & Spiegel, Mark M., 1994. "The role of human capital in economic development evidence from aggregate cross-country data," Journal of Monetary Economics, Elsevier, Elsevier, vol. 34(2), pages 143-173, October.
  8. Helleiner, G. K., 1990. "Trade strategy in medium-term adjustment," World Development, Elsevier, Elsevier, vol. 18(6), pages 879-897, June.
  9. Schneider, Friedrich, 2005. "Shadow economies around the world: what do we really know?," European Journal of Political Economy, Elsevier, Elsevier, vol. 21(3), pages 598-642, September.
  10. Bhagwati, Jagdish & Srinivasan, T. N., 1973. "Smuggling and trade policy," Journal of Public Economics, Elsevier, Elsevier, vol. 2(4), pages 377-389.
  11. Abbas Valadkhani, 2003. "An Empirical Analysis Of The Black Market Exchange Rate In Iran," School of Economics and Finance Discussion Papers and Working Papers Series, School of Economics and Finance, Queensland University of Technology 144, School of Economics and Finance, Queensland University of Technology.
  12. Raymond Fisman & Edward Miguel, 2007. "Corruption, Norms, and Legal Enforcement: Evidence from Diplomatic Parking Tickets," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 115(6), pages 1020-1048, December.
  13. Kaufmann, Daniel & Kaliberda, Aleksander, 1996. "Integrating the unofficial economy into the dynamics of post-socialist economies : a framework of analysis and evidence," Policy Research Working Paper Series 1691, The World Bank.
  14. Guillaume R. Fréchette, 2006. "Panel Data Analysis of the Time-Varying Determinants of Corruption," CIRANO Working Papers, CIRANO 2006s-28, CIRANO.
  15. Martin, Lawrence & Panagariya, Arvind, 1984. "Smuggling, trade, and price disparity: A crime-theoretic approach," Journal of International Economics, Elsevier, Elsevier, vol. 17(3-4), pages 201-217, November.
  16. Kiguel, Miguel & O'Connell, Stephen A, 1995. "Parallel Exchange Rates in Developing Countries," World Bank Research Observer, World Bank Group, World Bank Group, vol. 10(1), pages 21-52, February.
  17. Johnson, Simon & Kaufmann, Daniel & Zoido-Lobaton, Pablo, 1999. "Corruption, public finances, and the unofficial economy," Policy Research Working Paper Series 2169, The World Bank.
  18. Helge Berger & Volker Nitsch, 2008. "Gotcha! A Profile of Smuggling in International Trade," DEGIT Conference Papers, DEGIT, Dynamics, Economic Growth, and International Trade c013_026, DEGIT, Dynamics, Economic Growth, and International Trade.
  19. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, Econometric Society, vol. 59(6), pages 1551-80, November.
  20. Brunetti, Aymo & Weder, Beatrice, 2003. "A free press is bad news for corruption," Journal of Public Economics, Elsevier, Elsevier, vol. 87(7-8), pages 1801-1824, August.
  21. Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, Elsevier, vol. 76(3), pages 399-457, June.
  22. Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
  23. Raymond Fisman & Shang-Jin Wei, 2007. "The Smuggling of Art, and the Art of Smuggling: Uncovering the Illicit Trade in Cultural Property and Antiques," NBER Working Papers 13446, National Bureau of Economic Research, Inc.
  24. Loayza, Norman V., 1996. "The economics of the informal sector: a simple model and some empirical evidence from Latin America," Carnegie-Rochester Conference Series on Public Policy, Elsevier, Elsevier, vol. 45(1), pages 129-162, December.
  25. Miguel Braun & Rafael Di tella, 2004. "Inflation, Inflation Variability, and Corruption," Economics and Politics, Wiley Blackwell, Wiley Blackwell, vol. 16(1), pages 77-100, 03.
  26. Jorge Braga de Macedo, 1987. "Currency Incontrovertibility, Trade Taxes and Smuggling," NBER Working Papers 2177, National Bureau of Economic Research, Inc.
  27. Chang-Tai Hsieh & Enrico Moretti, 2005. "Did Iraq Cheat the United Nations? Underpricing, Bribes, and the Oil for Food Program," NBER Working Papers 11202, National Bureau of Economic Research, Inc.
  28. Tavares, Samia Costa, 2007. "Do rapid political and trade liberalizations increase corruption?," European Journal of Political Economy, Elsevier, Elsevier, vol. 23(4), pages 1053-1076, December.
  29. Bhagwati, Jagdish N & Hansen, Bent, 1973. "A Theoretical Analysis of Smuggling," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 87(2), pages 172-87, May.
  30. Biswas, Amit K. & Marjit, Sugata, 2007. "Preferential trade and mis-invoicing: Some analytical implications," International Review of Economics & Finance, Elsevier, Elsevier, vol. 16(1), pages 130-138.
  31. Phylaktis, Kate, 1991. "The black market for dollars in Chile," Journal of Development Economics, Elsevier, Elsevier, vol. 37(1-2), pages 155-172, November.
  32. Richard Clay Barnett, 2003. "Smuggling, non-fundamental uncertainty, and parallel market exchange rate volatility," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 36(3), pages 701-727, August.
  33. Rafael Di Tella & Alberto Ades, 1999. "Rents, Competition, and Corruption," American Economic Review, American Economic Association, American Economic Association, vol. 89(4), pages 982-993, September.
  34. Friedrich Schneider & Dominik Enste, 2000. "Shadow Economies Around the World," IMF Working Papers 00/26, International Monetary Fund.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Mohammad Reza Farzanegan & Andreas Buehn, 2012. "Hold Your Breath: A New Index of Air Quality," MAGKS Papers on Economics, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) 201226, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  2. 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.
  3. Friedrich Schneider & Alexandra Rudolph, 2013. "International Human Trafficking: Measuring clandestinity by the structural equation approach," Economics working papers, Department of Economics, Johannes Kepler University Linz, Austria 2013-25, Department of Economics, Johannes Kepler University Linz, Austria.
  4. Mohammad Reza Farzanegan, 2012. "Military Spending and Economic Growth: The Case of Iran," MAGKS Papers on Economics, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) 201223, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  5. 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.
  6. Andreas Buehn & Mohammad Reza Farzanegan, 2013. "Impact of education on the shadow economy: Institutions matter," Economics Bulletin, AccessEcon, vol. 33(3), pages 2052-2063.
  7. de Jong, Eelke & Bogmans, Christian, 2011. "Does corruption discourage international trade?," European Journal of Political Economy, Elsevier, Elsevier, vol. 27(2), pages 385-398, June.
  8. Buehn, Andreas & Farzanegan, Mohammad Reza, 2013. "Hold your breath: A new index of air pollution," Energy Economics, Elsevier, Elsevier, vol. 37(C), pages 104-113.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_2397. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.