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Trade Mis-Invoicing Between India & USA: An Empirical Exercise

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  • Subhasish Das
  • Amit K. Biswas

Abstract

India shares its majority of international trade with the United States of America. But a huge amount of discrepancy is frequently observed in the recorded bilateral trade statistics between these two countries. The main reasons are caused by several restrictions prevailing on the account of international trade in India. Export is found to be under-reported consistently whereas import data shows both over and under mis-invoicing in a periodic swing. This paper focuses on the determinants of this data fabrication with the help of empirical exercises. Several macroeconomic policy variables are taken to build up an econometric model and are tested statistically with the help of time series econometrics. Among all, relative interest rate plays the most important role to influence export and import mis-invoicing, followed by spot exchange rate and forward exchange rate. The exercise also finds a uni-directional causal relationship from import mis-invoicing of a period to export mis-invoicing of the next period. JEL Codes: C10, C13, C61, F13, F14, F21, K42

Suggested Citation

  • Subhasish Das & Amit K. Biswas, 2021. "Trade Mis-Invoicing Between India & USA: An Empirical Exercise," Foreign Trade Review, , vol. 56(1), pages 7-30, February.
    • Handle: RePEc:sae:fortra:v:56:y:2021:i:1:p:7-30
    DOI: 10.1177/0015732520961344
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    Cited by:

    1. Biswas, Amit K. & von Hagen, Jürgen & Sarkar, Sandip, 2022. "FDI Mismatch, trade Mis-reporting, and hidden capital Movements: The USA - China case," Journal of International Money and Finance, Elsevier, vol. 120(C).
    2. Das, Subhasish & Biswas, Amit K., 2023. "Can authorities curtail falsified trade & investment data that hide capital movements? Evidence from flows between BRICS and the USA," Journal of Policy Modeling, Elsevier, vol. 45(5), pages 957-974.

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    More about this item

    Keywords

    Export; import; mis-invoicing; interest rate; exchange rate; forward premium;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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