Celebrating the 40th Anniversary of the University of Macau: FSSDEC Seminar - "Faking Trade for Capital Control Evasion: Evidence from Dual Exchange Rate Arbitrage in China" by Jian WANG, 15 September 2021 (Wednesday) from 11:00 to 12:00, via ZOOM
澳門大學40週年校慶 ——社會科學學院經濟學系講座王健教授主講, 2021年09月15日 (星期三), 11:00-12:00 (線上Zoom講座)
Ref. No : ELOO-C6P9R4Posted by :EricaLo/UMAC
Department :FSSPosted Date : 09/09/2021
Category :
Bulletin
公告



Dear Colleagues and Students,

You are cordially invited to the following seminar on 15 September 2021 (Wed) via Zoom.

Title: Faking Trade for Capital Control Evasion: Evidence from Dual Exchange Rate Arbitrage in China
Speaker: Prof. Jian WANG

Date: 15 September 2021 (Wed)
Time: 11:00 – 12:00
Language: English
Zoom link: https://umac.zoom.us/j/98100193844?pwd=b050ai9kZzNuYm1SOUU2em1zWHZCUT09


Abstract:
Using a unique institutional setting of dual exchange rates in China, this paper provides novel evidence that firms manipulate international trade data to evade capital controls for foreign exchange arbitrage. We develop a model showing that trade data overreporting is positively (negatively) correlated with the exchange rate spread when the spread is positive (negative) if firms fake trade data to engage in foreign exchange arbitrage, and such correlations are more pronounced for products with low risks of being caught. Empirical results from threshold regressions using time series data and Benford’s law using firm-product trade data between mainland China and Hong Kong support the theoretical predictions of dual exchange rate arbitrage camouflaged under the trade account. Our results highlight the challenges to implementing capital controls and may help improve the effectiveness of such policies.


Best regards,
Department of Economics, FSS