Affiliation:
1. University of California Santa Barbara and National Bureau of Economic Research (email: )
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 F13, F14, H25, H87)
Publisher
American Economic Association
Subject
General Economics, Econometrics and Finance
Cited by
9 articles.
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