Misreported Trade (ESCoE DP 2019-13)

We propose a methodology to measure misreported trade across countries and over time in a consistent and comparable manner. Our methodology does not require a priori assumptions about which countries may be more or less likely to misreport. We derive seven indices on overall misreporting, as well as over- and under-reporting of trade, exports, and imports. Exploring bilateral trade data from 1996-2015, we derive country and product rankings and discuss prominent cases, such as China. We conclude with an application, documenting positive and statistically meaningful correlations of tariff and VAT rates with our import under-reporting index, even after controlling for potentially confounding factors.