Tax on Traded Goods, and Corrupt Non-traded Goods Sector: Implications for Intermediation Activities

2018 ◽  
Vol 69 (1) ◽  
pp. 27-41
Author(s):  
Biswajit Mandal
Keyword(s):  
Welfare Implication ◽  
Traded Goods

AbstractThis paper uses a Heckscher-Ohlin nugget framework with both traded and non-traded goods. Traded goods are subject to tax whereas non-traded good does not pay tax but is beset with corruption related intermediation. Our motive is to investigate the comparison of the effects of corruption and tax cut. We assume only the non-traded sector to be corruption affected. We argue that a fall in the degree of corruption surprisingly increases the number of intermediators while tax change has no effect on it. But the size of the intermediation activities expands in both the cases. Low corruption diminishes the exportable production and raises importable production while a tax cut does not have any such effect. The welfare implication is ambiguous in case of a decrease in cost of corruption. A tax cut, however, raises welfare unambiguously.

scholarly journals Managing the Dollar Over Its Cycles

2021 ◽  
Author(s):  
Lawrence L. Kreicher ◽  
Robert N. McCauley
Keyword(s):  
Foreign Exchange ◽  
Foreign Exchange Market ◽  
Private Investment ◽  
The United States ◽  
Exchange Market ◽  
Foreign Exchange Intervention ◽  
Traded Goods ◽  
Service Production ◽  
Withholding Tax ◽  
The U.S

AbstractThe United States has ceded to the rest of the world managing the dollar’s value. For a generation, the U.S. authorities have all but withdrawn from the foreign exchange market. Yet the dollar does not float freely as a result of this hands-off U.S. policy. Instead, other authorities manage the dollar exchange rates, albeit separately. These authorities make heavier purchases of dollars in its downswings than in the upswings, damping its decline. Thus, the Fed finds that accommodative monetary policy transmits less to U.S. manufacturing and traded services, and relies on still lower rates to stimulate interest-sensitive housing and auto demand. The current U.S. dollar policy of naming and shaming surplus-running countries accumulating foreign exchange reserves does not seem to work. Three alternatives warrant consideration. First, the U.S. could reinstate its withholding tax on interest income received by non-residents and even add policy criteria to bilateral tax treaties. Second, the U.S. authorities could retaliate by selling dollars against the currencies of dollar-buying jurisdictions running chronic surpluses. However, either the withholding tax or such retaliatory foreign exchange intervention pose huge practical challenges. Third, the U.S. authorities could re-enter the foreign exchange market, making large-scale asset purchases in foreign currency when the dollar rises sharply against its average value. Such a policy would encourage private investment in U.S. traded goods and service production. The challenge is to set ex ante foreign exchange intervention rules to guide market participants’ expectations, even positioning them to do the authorities’ work.

scholarly journals Shadow pricing rules for partially traded goods

1996 ◽  
Vol 11 (3) ◽  
pp. 169-182 ◽  
Author(s):  
Elio Londero
Keyword(s):  
Traded Goods ◽  
Shadow Pricing ◽  
Pricing Rules

Trade Tax Reform in a Small Open Economy with Distributional Objectives and Distortionary Taxation

2002 ◽  
Vol 1 (1) ◽  
Author(s):  
Jeremy Edwards
Keyword(s):  
Open Economy ◽  
Small Open Economy ◽  
Small Open Economies ◽  
Tax Reforms ◽  
Distortionary Taxation ◽  
Nontraded Goods ◽  
Traded Goods ◽  
Consumer Prices ◽  
Distortionary Taxes ◽  
The One

Abstract The paper shows that, if two conditions are satisfied, both radial contraction and concertina trade tax reforms continue to be desirable in a small open economy that differs from the one usually considered by having distributional objectives and using distortionary taxes to raise revenue. The first condition is that some optimisation in the choice of commodity taxes takes place - at a minimum, taxes on nontraded goods must be optimally chosen while taxes on traded goods keep the consumer prices of such goods constant. The second is that pure profits are absent from every household's budget constraint. These conditions mean that some care is required in arguing the case for simple trade tax reforms in small open economies.

A critical approach to trade-based money laundering

2014 ◽  
Vol 17 (2) ◽  
pp. 230-242 ◽  
Author(s):  
Melvin R.J. Soudijn
Keyword(s):  
Money Laundering ◽  
Task Force ◽  
Critical Approach ◽  
Content Type ◽  
Traded Goods ◽  
True Value ◽  
Police Investigations ◽  
Financial Action Task

Purpose – The purpose of this paper is to broaden the discussion on trade-based money laundering (TBML). The literature is too narrowly focused on the misrepresentation of the value, quantity or quality of the traded goods. This focus leads to the analysis of price anomalies as a signal of over- or under-invoicing. However, TBML can also occur without manipulation of these factors. Design/methodology/approach – A review of the literature and case study of police investigations. Findings – Financial action task force (FATF) definitions are seriously flawed. The question of whether detecting TBML on the basis of statistical trade data is effective should be much more open to debate. Police investigations show that goods are shipped at their true value within the context of TBML. Research limitations/implications – Using outliers to identify and act on cases of TBML has often been propagated, but scarcely been used to actually show TBML. Real findings are needed. Practical implications – Goods intended for TBML can also be paid for in cash. These cash payments are often out of character with the normal clientele. This should alert companies and compliance sections of banks alike. Originality/value – The critique on the FATF definition opens the field for a more fitting definition. The description of actual TBML cases makes it possible to better understand this method of money laundering.

Russia–ASEAN: Trade and Global Value Chains

2015 ◽  
pp. 25-39
Author(s):  
K. Muradov
Keyword(s):  
South Korea ◽  
Value Chain ◽  
Bilateral Trade ◽  
Value Added ◽  
Global Value Chains ◽  
Trade Flows ◽  
Value Chains ◽  
Trade Data ◽  
Traded Goods ◽  
Trade In Value Added

Traditional trade statistics that originate in customs records is inadequate to measure the complex interdependencies in today’s globalized economy, or what is known as the global value chains. The article focuses on Russia–ASEAN trade. The author applies innovative methods of measuring trade in value added terms in order to capture the unobserved bilateral linkages behind the officially recorded trade flows. First, customs and balance of payments sources of bilateral trade data are briefly reviewed. For user, there are at least two inherent problems in those data: the inconsistencies in “mirror” trade flows and the attribution of the origin of a traded product wholly to the exporting country. This results in large discrepancies between Russian and ASEAN “mirror” trade data and, arguably, their low importance as each other’s trade partners. Next, the author explores new data from inter-country input-output tables that necessarily reconcile bilateral differences and offer greater detail about the national and sectoral origin or destination of traded goods and services. Relevant data are derived from the OECD-WTO TiVA database and are rearranged to obtain various estimates of Russia–ASEAN trade in value added in 2009. The main finding is that sizable amount of the value added of Russian origin is embodied in third countries’ exports to ASEAN members and ASEAN members’ exports to third countries. As a result, the cumulative flow of Russia’s value added to ASEAN members is estimated to be 62% larger than the direct gross exports, whereas for China and South Korea it is, respectively, 21% and 23% smaller. The indirect, unobserved value added flows can be largely explained by the use of Russian energy resources, chemicals and metals as imported inputs in third countries (China, South Korea) and ASEAN members’ own production. The contribution of these inputs is then accumulated along the value chain. Finally, the most important sectoral value chains are visualized for readers’ convenience. So far, it’s apparent that Russia is linked to ASEAN countries through intricate production networks and indirectly contributes to their trade with third countries.

scholarly journals Boom Goes the Price: Giant Resource Discoveries and Real Exchange Rate Appreciation

2020 ◽  
Vol 130 (630) ◽  
pp. 1715-1728 ◽  
Author(s):  
Torfinn Harding ◽  
Radoslaw Stefanski ◽  
Gerhard Toews
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Real Exchange Rate ◽  
Direct Evidence ◽  
Oil And Gas ◽  
Real Exchange Rates ◽  
Labour Productivity ◽  
Dutch Disease ◽  
The Real ◽  
Traded Goods

Abstract We estimate the effect of giant oil and gas discoveries on bilateral real exchange rates. A giant discovery with the value of 10% of a country’s GDP appreciates the real exchange rate by 1.5% within ten years following the discovery. The appreciation starts before production begins and the non-traded component of the real exchange rate drives the appreciation. Labour reallocates from the traded goods sector to the non-traded goods sector, leading to changes in labour productivity. These findings provide direct evidence on the channels central to the theories of the Dutch disease and the Balassa–Samuelson effect.

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