IDEAS home Printed from https://ideas.repec.org/p/qed/dpaper/229.html
   My bibliography  Save this paper

Measuring The Foreign Exchange Premium And The Premium For Non-Tradable Outlays For Twenty Countries In Africa

Author

Listed:
  • Glenn P. Jenkins

    (Department of Economics, Queen's University, Canada, Eastern Mediterranean University, Mersin 10, Turkey)

  • Chun-Yan Kuo

    (Queen's University, Canada)

  • Sener Salci

    (Department of Economics, University of Birmingham, UK)

Abstract

In this paper we develop an analytical general equilibrium framework to measure the foreign exchange premium and the premium for non-tradable outlays for a country. The framework allows us to capture in a consistent manner the impacts of the sourcing of funds and their expenditure on tradable and non-tradable goods and services of investment projects. An application of the model is carried out for 20 countries in Africa. The results show that the foreign exchange premiums range from 4.00% to 9.50% and the premium for non-tradable outlays from -1.75% to 1.50%. The empirical values depend on a number of factors, including the indirect taxes, production subsidies and international trade distortions of a country. These premiums should be incorporated into the economic evaluation of investment projects.

Suggested Citation

  • Glenn P. Jenkins & Chun-Yan Kuo & Sener Salci, 2013. "Measuring The Foreign Exchange Premium And The Premium For Non-Tradable Outlays For Twenty Countries In Africa," Development Discussion Papers 2013-05, JDI Executive Programs.
    • Handle: RePEc:qed:dpaper:229
    as

    Download full text from publisher

    File URL: https://cri-world.com/publications/qed_dp_229.pdf
    Download Restriction: no
    File URL: https://cri-world.com/publications/qed_dp_229_a1.xlsx
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Arnold C. Harberger, 1972. "On Measuring the Social Opportunity Cost of Public Funds," Palgrave Macmillan Books, in: Project Evaluation, chapter 0, pages 94-122, Palgrave Macmillan.
    2. repec:bla:ecorec:v:67:y:1991:i:199:p:307-16 is not listed on IDEAS
    3. Arnold C Harberger & Glenn P Jenkins & Chun‐Yan Kuo & M Benjamin Mphahlele, 2003. "The Economic Cost of Foreign Exchange for South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 71(2), pages 155-169, June.
    4. Blitzer, Charles & Dasgupta, Partha & Stiglitz, Joseph, 1981. "Project Appraisal and Foreign Exchange Constraints," Economic Journal, Royal Economic Society, vol. 91(361), pages 58-74, March.
    5. George Fane, 1991. "The Social Opportunity Cost of Foreign Exchange: A Partial Defence of Harberger et al," The Economic Record, The Economic Society of Australia, vol. 67(4), pages 307-316, December.
    6. Balassa, Bela, 1974. "Estimating the Shadow Price of Foreign Exchange in Project Appraisal," Oxford Economic Papers, Oxford University Press, vol. 26(2), pages 147-168, July.
    7. Arnold C. Harberger, 1967. "Techniques of Project Appraisal," NBER Chapters, in: National Economic Planning, pages 131-152, National Bureau of Economic Research, Inc.
    8. repec:aer:wpaper:180 is not listed on IDEAS
    9. Boskin, Michael J, 1978. "Taxation, Saving, and the Rate of Interest," Journal of Political Economy, University of Chicago Press, vol. 86(2), pages 3-27, April.
    10. Max F. Millikan, 1967. "National Economic Planning," NBER Books, National Bureau of Economic Research, Inc, number mill67-1.
    11. Batra, Raveendra N & Guisinger, Stephen, 1974. "A New Approach to the Estimation of the Shadow Exchange Rate in Evaluating Development Projects in Less Developed Countries," Oxford Economic Papers, Oxford University Press, vol. 26(2), pages 192-207, July.
    12. International Monetary Fund, 2010. "Democratic Republic of the Congo: Statistical Appendix," IMF Staff Country Reports 2010/011, International Monetary Fund.
    13. David F. Burgess, 1981. "The Social Discount Rate for Canada: Theory and Evidence," Canadian Public Policy, University of Toronto Press, vol. 7(3), pages 383-394, Summer.
    14. Michael J. Boskin, 1978. "Taxation, Saving, and the Rate of Interest," NBER Chapters, in: Research in Taxation, pages 3-27, National Bureau of Economic Research, Inc.
    15. Bertrand, Trent J, 1974. "The Shadow Exchange Rate in an Economy with Trade Restrictions," Oxford Economic Papers, Oxford University Press, vol. 26(2), pages 185-191, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chun-Yan Kuo & Sener Salci & Glenn P. Jenkins, 2015. "Measuring the Foreign Exchange Premium and the Premium for Non-Tradable Outlays for 20 Countries in Africa," South African Journal of Economics, Economic Society of South Africa, vol. 83(2), pages 269-285, June.
    2. Glenn P. Jenkins & Chun-Yan kuo & Arnold C. Harberger, 2020. "Analyse Couts-Avantages Pour Les Decisions D’Investissement Chapitre 9; Le Prix Ombre Des Bourses D'échange Et De Marchandises Non Commercialisables," Development Discussion Papers 2020-09, JDI Executive Programs.
    3. Glenn Jenkins & Chun-Yan Kuo, 2007. "The Economic Opportunity Cost of Capital for Canada - An Empirical Update," Development Discussion Papers 2007-04, JDI Executive Programs.
    4. Glenn P. Jenkins, 1981. "The Public-Sector Discount Rate for Canada: Some Further Observations," Canadian Public Policy, University of Toronto Press, vol. 7(3), pages 399-407, Summer.
    5. Rosen, Harvey S, 1982. "Taxation and On-the-Job Training Decisions," The Review of Economics and Statistics, MIT Press, vol. 64(3), pages 442-449, August.
    6. Martin Feldstein, 1995. "The Effect of a Consumption Tax on the Rate of Interest," NBER Working Papers 5397, National Bureau of Economic Research, Inc.
    7. Chao, Chi-Chur & Yu, Eden S. H., 1995. "The shadow price of foreign exchange in a dual economy," Journal of Development Economics, Elsevier, vol. 46(1), pages 195-202, February.
    8. Hubbard, R. Glenn & Skinner, Jonathan & Zeldes, Stephen P., 1994. "The importance of precautionary motives in explaining individual and aggregate saving," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 40(1), pages 59-125, June.
    9. Summers, Lawrence H, 1984. "The After-Tax Rate of Return Affects Private Savings," American Economic Review, American Economic Association, vol. 74(2), pages 249-253, May.
    10. Thomas Eichner & Marco Runkel, 2012. "Interjurisdictional Spillovers, Decentralized Policymaking, and the Elasticity of Capital Supply," American Economic Review, American Economic Association, vol. 102(5), pages 2349-2357, August.
    11. Gian Maria Milesi-Ferretti & Nouriel Roubini, 1995. "Growth Effects of Income and Consumption Taxes: Positive and Normative Analysis," Working Papers 95-18, New York University, Leonard N. Stern School of Business, Department of Economics.
    12. Martin Feldstein, 1989. "Tax Policies For the 1990's: Personal Saving, Business Investment, and Corporate Debt," NBER Working Papers 2837, National Bureau of Economic Research, Inc.
    13. Víctor J Elías, 1984. "Una Nota sobre la Elasticidad del Ahorro con Respecto a la Tasa de Interés," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 21(62), pages 83-90.
    14. Lawrence B. Lindsey, 1985. "Taxpayer Behavior and the Distribution of the 1982 Tax Cut," NBER Working Papers 1760, National Bureau of Economic Research, Inc.
    15. Blinder, Alan S, 1981. "Temporary Income Taxes and Consumer Spending," Journal of Political Economy, University of Chicago Press, vol. 89(1), pages 26-53, February.
    16. Austin, D. Andrew, 1999. "Social Security as an Economic Stabilization Program," Journal of Macroeconomics, Elsevier, vol. 21(2), pages 309-333, April.
    17. Bruno Théret & Didier Uri, 1988. "La courbe de Laffer dix ans après : un essai de bilan critique," Revue Économique, Programme National Persée, vol. 39(4), pages 753-808.
    18. Francisco Alvarez‐Cuadrado & Mayssun El‐Attar Vilalta, 2018. "Income Inequality and Saving," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 80(6), pages 1029-1061, December.
    19. Glenn Jenkins & CHUN-YAN KUO & JOHN GIRALDEZ, 2007. "Canadian Regulatory Cost-Benefit Analysis Guide," Development Discussion Papers 2007-03, JDI Executive Programs.
    20. Martin S. Feldstein, 1997. "The Costs and Benefits of Going from Low Inflation to Price Stability," NBER Chapters, in: Reducing Inflation: Motivation and Strategy, pages 123-166, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Distortions; taxes; subsidies; foreign exchange premium; premium for non-tradable outlays; tradable goods; Africa;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • P45 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - International Linkages
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:qed:dpaper:229. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mark Babcock (email available below). General contact details of provider: https://edirc.repec.org/data/qedquca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.