Do Value-Added Taxes Affect International Trade Flows? Evidence from 30 Years of Tax Reforms

Youssef Benzarti and Alisa Tazhitdinova

American Economic Journal: Economic Policy, 2021, vol. 13, issue 4, 469-89

Abstract: This paper uses all value-added tax (VAT) changes across EU Member States from 1988 to 2016 to estimate the effect of VATs on trade flows. We find small elasticities of trade flows with respect to VATs, even when VAT changes are large. These elasticities are substantially smaller than the elasticities of trade flows with respect to tariffs estimated in the trade literature. This finding holds across different time periods, countries, and types of reforms. Our results imply that VATs are unlikely to distort trade flows.

JEL-codes: F13 F14 H25 H87 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (6)

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Working Paper: Do Value-Added Taxes Affect International Trade Flows? Evidence from 30 Years of Tax Reforms (2019)
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DOI: 10.1257/pol.20190492

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