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

Mohammad Reza Farzanegan ()

No 2397, CESifo Working Paper Series from CESifo

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.

Keywords: smuggling; structural equation model; Iran; illegal trade (search for similar items in EconPapers)
JEL-codes: C39 H26 O17 (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Illegal trade in the Iranian economy: Evidence from a structural model (2009)
Working Paper: Illegal Trade in the Iranian Economy: Evidence from a Structural Model (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_2397

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