Research on Monday Rotterdam

Beata Javorcik (University of Oxford, United Kingdom)
Monday, November 7, 2016

Macroeconomic policies may have unintended consequences. This paper focuses on an unexpected policy change in Turkey: an increase in a special import tax imposed when domestic or foreign credit is utilized to finance the cost of imported goods. The policy change came as a response to high and persistent current account deficits. It had two effects. As intended, it reduced the volume of the affected trade flows. At the same time, evidence based on Benford’s Law of the first digits suggests that it increased evasion of import taxes. (Coauthor: Banu Demir.)