Estimating Trade Misinvoicing from Bilateral Trade Statistics: The Devil is in the Details

Keejae P. Hong, Simon J. Pak

Research output: Contribution to journalArticle

4 Citations (Scopus)

Abstract

Trade misinvoicing, an important channel of illicit financial flows, is frequently estimated by the partner-country trade data comparison method. However, this method relies on a critical but incorrect assumption that the trade statistics in partner countries exhibit no misinvoicing. This study proves that the assumption of no misinvoicing in partner countries cannot be supported, raising serious doubts about the reliability of the method and a possibility that inappropriate policy decisions may be made based on the erroneous estimates of trade misinvoicing. We introduce an alternative method to estimate trade misinvoicing which does not rely on the trade statistics of partner countries.

Original languageEnglish (US)
Pages (from-to)3-28
Number of pages26
JournalInternational Trade Journal
Volume31
Issue number1
DOIs
StatePublished - Jan 1 2017

Fingerprint

Trade statistics
Bilateral trade
Financial flows

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Economics, Econometrics and Finance(all)

Cite this

@article{a55949b49dba497fa71e5d68cf8240cc,
title = "Estimating Trade Misinvoicing from Bilateral Trade Statistics: The Devil is in the Details",
abstract = "Trade misinvoicing, an important channel of illicit financial flows, is frequently estimated by the partner-country trade data comparison method. However, this method relies on a critical but incorrect assumption that the trade statistics in partner countries exhibit no misinvoicing. This study proves that the assumption of no misinvoicing in partner countries cannot be supported, raising serious doubts about the reliability of the method and a possibility that inappropriate policy decisions may be made based on the erroneous estimates of trade misinvoicing. We introduce an alternative method to estimate trade misinvoicing which does not rely on the trade statistics of partner countries.",
author = "Hong, {Keejae P.} and Pak, {Simon J.}",
year = "2017",
month = "1",
day = "1",
doi = "10.1080/08853908.2016.1202160",
language = "English (US)",
volume = "31",
pages = "3--28",
journal = "International Trade Journal",
issn = "0885-3908",
publisher = "Taylor and Francis Ltd.",
number = "1",

}

Estimating Trade Misinvoicing from Bilateral Trade Statistics : The Devil is in the Details. / Hong, Keejae P.; Pak, Simon J.

In: International Trade Journal, Vol. 31, No. 1, 01.01.2017, p. 3-28.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Estimating Trade Misinvoicing from Bilateral Trade Statistics

T2 - The Devil is in the Details

AU - Hong, Keejae P.

AU - Pak, Simon J.

PY - 2017/1/1

Y1 - 2017/1/1

N2 - Trade misinvoicing, an important channel of illicit financial flows, is frequently estimated by the partner-country trade data comparison method. However, this method relies on a critical but incorrect assumption that the trade statistics in partner countries exhibit no misinvoicing. This study proves that the assumption of no misinvoicing in partner countries cannot be supported, raising serious doubts about the reliability of the method and a possibility that inappropriate policy decisions may be made based on the erroneous estimates of trade misinvoicing. We introduce an alternative method to estimate trade misinvoicing which does not rely on the trade statistics of partner countries.

AB - Trade misinvoicing, an important channel of illicit financial flows, is frequently estimated by the partner-country trade data comparison method. However, this method relies on a critical but incorrect assumption that the trade statistics in partner countries exhibit no misinvoicing. This study proves that the assumption of no misinvoicing in partner countries cannot be supported, raising serious doubts about the reliability of the method and a possibility that inappropriate policy decisions may be made based on the erroneous estimates of trade misinvoicing. We introduce an alternative method to estimate trade misinvoicing which does not rely on the trade statistics of partner countries.

UR - http://www.scopus.com/inward/record.url?scp=84980009717&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84980009717&partnerID=8YFLogxK

U2 - 10.1080/08853908.2016.1202160

DO - 10.1080/08853908.2016.1202160

M3 - Article

AN - SCOPUS:84980009717

VL - 31

SP - 3

EP - 28

JO - International Trade Journal

JF - International Trade Journal

SN - 0885-3908

IS - 1

ER -